Despite the recent rescission of the Cole memo, marijuana businesses, stocks and investors perceive the industry as status quo, business as usual and poised for forward movement.
Investors who are already ‘in’, are looking to partner up with those who have also been ‘in’ and are growing. Investors who are looking to get ‘in’, are looking for those who want to get ‘out’ or are looking to stay ‘in’ on a more limited basis. Exit and entrance strategies are the natural evolution of a new industry, and all point to the strength and foundation of the business of marijuana.
Viridian launched its “Deal Tracker” and lists weekly M&A deals. Since 2016 there have been one hundred twenty six M&A deals but analysts believe that it’s actually much higher. Progress and development of technology in the industry serve as a catalyst for investors to pursue opportunities and smaller brands and business have become very attractive targets. Analysts argue that investors should not ignore Canada whose border will be crossed in the future.
Valuations, however, will vary from market to market and from state to state based upon the rules and regulations implemented in each one. Some argue that there is no reliable method of valuation. A lot depends on the likelihood that your state is going to go to recreational or if you already have a medical license in a state that is also going to recreational use. Your leverage is likely to depend on your ability to sustain.
It appears that the future will be full of these mergers and acquisitions. M&A in MJ is here to stay.