Last year, we witnessed the biggest advancement of the cannabis movement in history. Following months of debate, Canada became the first industrialized country in the world to legalize recreational marijuana, while the number of U.S. states to have waved the green flag on medical cannabis increased to 33.
With the cannabis movement picking up steam, and a record number of Americans supporting a broad-based legalization of the drug, marijuana stocks are moving onto the next stage of their maturation process. After focusing on capacity expansion throughout most of 2018, industrywide consolidation is the name of the game in 2019 — especially with regard to the vertically integrated dispensary model in the United States. By “vertically integrated,” I mean companies that control their supply chain from seed to sale.
Vertically integrated marijuana dispensary buyouts are getting bigger and bigger in the U.S.
Earlier this year, U.S.-focused dispensary operator iAnthus Capital Holdings completed the largest U.S. pot acquisition in history when it purchased MPX Bioceutical for around $600 million. To date, this is still the largest completed transaction among pot stocks in the United States.
Of course, there are no shortage of deals that are even larger than the iAnthus-MPX buyout. Upscale dispensary chain MedMen Enterprises is currently in the process of buying privately held PharmaCann for $682 million in an all-stock deal that’s expected to close in the second half of this year.
In mid-March 2019, Harvest Health & Recreation (NASDAQOTH:HRVSF) announced what would, at the time, become the largest announced U.S. marijuana acquisition of a privately held company. Harvest Health, one of the very few pot stocks to be generating an operating profit, laid out plans to buy Verano Holdings for $850 million in stock. Assuming the deal gains approval from shareholders and regulators, and Harvest Health’s other pending deals close, Harvest Health will have the highest number of retail licenses (130) in its portfolio of any dispensary operator.
And on April 1, Cresco Labs (NASDAQOTH:CRLBF) shocked investors when it announced that it’d be acquiring Origin House (NASDAQOTH:ORHOF) for $823 million in an all-stock deal. This deal, which will allow Cresco the opportunity to push its in-house brands into more than 500 California dispensaries thanks to Origin House’s growing cannabis distribution market shares in the Golden State, was the largest between two U.S.-focused publicly traded marijuana stocks. Should it close, it’ll surpass the iAnthus-MPX deal for being the largest in the U.S. among two publicly traded companies.
Then Curaleaf Holdings (NASDAQOTH:CURLF) came along and changed the game on May 1.
Curaleaf makes history with its latest acquisition
This past Wednesday, Curaleaf agreed to buy Cura Partners in an all-stock deal worth $949 million (1.27 billion Canadian dollars). Assuming closure, it would be the largest U.S.-focused acquisition in history. Period! Note, I’m not including the April-announced deal by Canopy Growth to acquire Acreage Holdings for $3.4 billion, because that deal is wholly contingent on the U.S. legalizing marijuana at the federal level, which is no guarantee.