We’re not even out of the first month of 2019 yet, and already, the number of mergers and acquisitions in the fast-moving cannabis sector is breaking new ground.
So far this year, there have been 10 mergers and acquisitions of cannabis firms, compared to two during the same timeframe last year, according to Viridian Capital Advisors. Not surprisingly, the average size of these deals is growing – from $9.3 million last year to $25.2 million thus far in 2019.
Expect that to rise in the coming months, dramatically…
See, the sector’s increasing popularity with consumers – and, following legalization, their growing ability and desire to use cannabis either as a medical treatment or recreationally – is attracting some big players to the space.
Pharmaceutical giant Novartis AG (NYSE:NVS) recently partnered with Tilray Inc. (Nasdaq:TLRY), a provider of high-grade medical cannabis in Canada, to provide medical marijuana throughout the world. The firms will start co-branding certain non-smokable products for medical use, and educating doctors and pharmacists about the potential benefits and side effects of cannabis.
And investors liked what they saw.
The deal’s announcement on Dec. 18, 2018 sent Tilray shares soaring 23%.
So after Novartis’ entry into cannabis, I wouldn’t be surprised if we saw more global pharma firms step into similar deals sooner than later.
Then there’s the rapid growth in cannabis company initial public offerings (IPOs).
About 50 cannabis stocks currently trade out of Canada – double what was available in 2017.
Again, expect that number to rise this year as more firms iron out supply and distribution issues in the only advanced nation with national legalization. Not to mention the fact that come this October, value-added edibles will start to go on sale in the Great White North, which will bring a whole new layer of revenue and profits for cannabis companies.
Some of these will become the next IPOs, with some serious profit potential.
But here’s the thing. IPOs can be a risky venture, particularly in a new industry like legal cannabis that’s just getting off the ground. I certainly wouldn’t recommend jumping in blindly here.
Having a team of researchers and analysts dedicated to figuring out the best recommendations… and which ones you should avoid like the plague… is key.
You’ve got all that and then some with the team at the National Institute of Cannabis Investors (NICI). I’m actually a board member at NICI, so I’ve seen these folks in action.
And right now, they’re knee deep in figuring out the best plays to make as a new crop of firms prepare to make their public debut.
And have a great weekend!