Indoor Harvest Corp (INQD)

[Millenium323]

Are marijuana megadeals on the rise?
Published May 19, 2021

The May 10 announcement that Florida-based Trulieve would acquire Arizona-headquartered Harvest Health & Recreation for $2.1 billion could indicate that big marijuana mergers are making a return.

The deal almost certainly signals more industry consolidation to come and pressure on rivals to follow suit.

t’s part of the long game, even if federal legalization isn’t around the corner, said Morgan Paxhia, managing director of San Francisco-based Poseidon Asset Management.

He said a big deal such as Trulieve-Harvest “just makes sense for operators trying to get scale and significant market share.”

Viridian Capital Advisors noted: “Given the strong capital position of many of the top MSOs following capital raises in late 2020 and earlier this year and the arms-race nature of this industry, we expect larger-type acquisitions like the Trulieve-Harvest deal to become more common in the near term.”

Most likely targets, as identified by Viridian, include Ayr Strategies, Jushi Holdings, Planet 13 Holdings and TerrAscend.

Other industry insiders and observers have thrown the likes of Cresco Labs and Green Thumb Industries into that pool as well.

If the Trulieve-Harvest deal closes as expected, the combined marijuana company will operate 22 cultivation and processing facilities and 126 medical and recreational cannabis stores in 11 states.

The merger will provide Trulieve, No. 1 by a long shot in Florida’s hot medical cannabis market, an instant market leader in Arizona because of Harvest’s strong position there.

But, notably, the combined entity won’t have a presence in New York or New Jersey, both of which recently legalized recreational marijuana.

In the months before the Trulieve-Harvest announcement, mergers and acquisitions were smaller and more narrowly focused.

For example, the sizzling Pennsylvania medical cannabis market has attracted $400 million worth of M&A activity just since March.

Expect those deals to continue for high-potential and underdeveloped markets.

But the climate for big M&As certainly looks better than it did a year or two ago, thanks to the easing of global pandemic restrictions and the loosening of capital markets.

– Jeff Smith




https://mjbizdaily.com/are-marijuana-megadeals-on-the-rise/