US Focus Could Drive M&A for Canadian Cannabis Operators


A consolidation pattern has been anticipated within the Canadian hashish house for a while now based mostly on the scale of the market in comparison with the variety of operations within the nation.

With a lately renewed monetary enhance and two important offers amongst main gamers within the nation, M&A appears set to usher in a brand new order for Canadian hashish.

Meanwhile, as Canadian corporations wait for coverage modifications beneath the border, M&A might assist them place forward of modifications within the American authorized panorama.

Recent offers push consolidation pattern for Canadian M&A

Heading into 2020, a pattern of consolidation was anticipated for Canadian hashish operators. However, issues from the monetary uncertainty attributable to the COVID-19 pandemic doubtless affected plans.

The latter half of 2020 and the start of 2021 introduced some newfound momentum for hashish investments; this got here alongside critical developments within the Canadian market that boosted the efficiency of operators, in accordance with Nawan Butt, portfolio supervisor with Purpose Investments.

The tone for M&A between hashish producers in Canada was set late final 12 months, when Aphria (NASDAQ:APHA,TSX:APHA) and Tilray (NASDAQ:TLRY) introduced a company union to traders.

The deal despatched waves throughout the hashish investing panorama because it mixed two of the most important names within the public markets, leading to an organization value roughly C$5 billion.

Butt instructed the Investing News Network (INN) that the Aphria and Tilray deal was an excellent alternative for every firm to fill the opposite’s weak spots. “A great merger of equals, I would say,” he mentioned.

Following affirmation of the transaction, Som Seif, founder and CEO of Purpose Financial, said the deal was a place to begin for extra consolidation within the Canadian hashish house.

And the pattern did actually proceed because of an all-share C$235 million acquisition deal struck between HEXO (NYSE:HEXO,TSX:HEXO) and fellow public producer Zenabis Global (TSX:ZENA).

“Canadian licensed producers (LPs) have been given a second lifeline of sorts here where the capital markets are back to support them and their balance sheets and put them back into growth mode,” Butt instructed INN.