Marijuana MSOs are flying high; more M&A action expected to come

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Multi-state cannabis operators are enjoying double-digit growth this year

It was only a matter of three months this year before US multi-state marijuana operators (MSOs) began reporting astronomical growth in their respective revenues. This positive upswing is said to be primarily due to good execution and strong consumer demand in markets where there has already been a strong establishment. It has not taken long for more and more states to dive into the industry and this has had a major impact across the board. Several MSO’s have reported double-digit revenue growth in the first quarter of 2021, which has been a positive difference from the same period last year and, in several cases, an amazing year-over-year growth.

No matter how big or small the MSO is, most of them reported greatly improved gross profit margins. Even smaller operators, such as TerrAscend and Ascend Wellness, have managed to make their numbers quite positive, and have not wanted to be left behind. “The most important takeaway (from the quarter) is that U.S. cannabis continues to prove the thesis that it is one of the best and fastest-growing industries in the U.S.,” said Emily Paxhia, managing director of Poseidon Investment Management, San Francisco.

Given all of these results, it would not be at all surprising to see established MSOs and emerging companies looking to enter into a new round of M&A (mergers and acquisition) activity. One of the most notable recently has been Florida-based Trulieve’s deal to acquire Arizona-based Harvest Health & Recreation in a $2.1 billion all-stock arrangement. This is an acquisition that has positioned itself well in two key industry states.