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The cannabis industry is set for a wave of M&A

The cannabis industry is set for a wave of M&A

Jeremy Berke,Yeji Jesse Lee

Welcome to Insider Cannabis, our weekly newsletter where we're bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.

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Happy Friday readers,

This week, we focused on reporting around how cannabis companies reacted to — and are planning for — the results of last week's election. Obviously, the election was a big topic in the back-to-back earnings calls we listened to this week. You can read our roundup here.

We also held a panel recapping last week's events, moderated by our editor Zachary Tracer. If you missed it, check out the whole recording here.

And yes, we're all thinking about politics. Business Insider is launching a new newsletter — 10 Things in Politics You Need to Know Today — later this month. If you're interested in a roundup of the top news and analysis from D.C. and beyond on a daily basis, you're going to want to sign up here.

Jeremy & Yeji

Here's what we wrote about this week:

The cannabis industry is set for a wave of M&A after 5 states voted to legalize marijuana. Industry insiders lay out who's going shopping and the types of deals you can expect.

Cannabis companies are getting acquisitive as they jockey for control of the rapidly expanding legal marijuana map in the US. Companies are already making moves to either expand their footprints in these states or enter them through mergers and acquisitions. We talked to analysts and lawyers in cannabis to ask them about the deals we should expect moving forward.

Cannabis insiders and advocates say more needs to be done to make the industry more inclusive for business owners and employees. Here's what they suggest.

This one is from freelancer Andrew Ward. More could be done to make the cannabis industry more inclusive for owners and employees alike, sources say.

Advocates are fighting to remove financial barriers to business licensing and for policies like allocating cannabis tax revenue to communities most affected by the drug war.

An inside look at what marijuana legalization's election sweep means for the future of the multi-billion dollar industry

After the results of last week's vote, one thing is clear: Americans overwhelmingly support cannabis reform. Business Insider's cannabis reporters, Jeremy Berke and Yeji Jesse Lee spoke with senior editor Zachary Tracer about everything you need to know about the future of the cannabis industry following the election, from when you can buy marijuana legally in your state to how companies are preparing to dominate the rapidly expanding legal marijuana map.

The world's biggest cannabis companies are jockeying to dominate the $61 billion US market after marijuana legalization swept 5 states

Cannabis giants are developing plans to dominate the lucrative US marijuana market — even though they probably won't be able to enter it for some time. On Monday, three of Canada's largest cannabis companies, Canopy Growth, Tilray, and Aurora Cannabis, reported earnings — the US election was a big topic of discussion.

Conference calendar

Conference season is in full swing — at least, on Zoom — and Jeremy will be moderating a slew of panels next week:

He's doing two keynote interviews at the Cannabis World Congress and Business Expo, with cannabis pioneer Calvin Frye on Tuesday, and Bruce Linton on Wednesday. Use the code Insider10 to get a discounted ticket, and register here.
He's also moderating two panels at Prohibition Partners Live conference, with a number of top industry leaders. On Thursday, he'll be speaking with Merida Capital's Mitch Baruchowitz, Enexis AB's David Bonnier, and University of Cambridge professor Alan Jagolinzer about how to invest in cannabis, and the challenges with researching companies.
And, he'll be speaking with Kate Miller, the CEO of Miss Grass, and David Kessler, a VP at Agrify, about disruption in the cannabis industry. You can register for tickets here.

Executive Moves

Cannabis company Indus Holdings announced that Brian Shure, formerly at Ambrose Capital Partners, will join the company as CFO.
MediPharm Labs CFO Bobby Kwon has resigned from the company, effective at the end of November. The company said he is leaving for family reasons in a statement.

Earnings roundup

Lots of cannabis companies reported last week. Here are the highlights:

Canopy Growth reported $135 million in revenue over the quarter with a $97 million net loss.
Aurora Cannabis reported $67.8 million in revenue, with an adjusted EBITDA loss of $57.9 million. Aurora says it has $250 million in cash on hand.
Tilray reported $51.4 million in revenue with a $2.3 million net loss.
Green Thumb Industries reported $157.1 million in revenue on a net income of $9.6 million. The company has $78.1 million in cash on hand with $97 million debt outstanding.
Acreage Holdings reported $31.7 million in revenue on a net loss of $35.7 million.
Harvest Health & Recreation reported $61.6 million in revenue on a $2.1 million net loss.

This section has been corrected to include the correct earnings figures for Green Thumb Industries.

Deals, launches, and IPOs

Aurora Cannabis announced a $125 million equity offering after a wildly volatile week of trading. Though the offering would dilute existing shareholders, Stifel analysts called it "shrewd" in a note.
Canadian psilocybin company Cybin started trading on the NEO exchange on Tuesday
Cannabis company Verano Holdings announced on Wednesday it will acquire vertically integrated cannabis company AltMed, which has operations in Florida and Arizona. The combined company will operate under the Verano name, and will be one of the largest private cannabis companies once the merger closes, the company said.
New Leaf Ventures announced its partnership with Washington state-based Schilling Hard Cider, to enter the North American cannabis-infused beverage market.
Kentucky CBD company Cornbread Hemp, led by Jim Higdon, a former reporter, closed a $500,000 funding round.
Furna, a Waterloo, Ontario-based vape startup, is launching its new vape, designed by former BlackBerry execs — aimed at a similar market as the Pax 3 — next Friday.

Policy moves

Most major news outlets reported on Saturday that Joe Biden won the presidential election, though Trump has yet to concede. Read our coverage of what a Biden administration would mean for the cannabis industry here.
Support for legal marijuana hit a new high, according to a Gallup poll. 68% of voters support legalization, with 79% of 18 - 29-year-olds supportive.
Lawmakers in New Jersey on Monday released a marijuana legalization bill after state residents voted to legalize marijuana. Legalization goes into effect on January 1 and lawmakers hope to pass the legislation before then.
Israel is expected to legalize and regulate adult-use cannabis in the next nine months, after a government committee published and sent its recommendations on recreational cannabis to the Justice Ministry on Thursday.
Regulators from 19 states formed The Cannabis Regulators Association (CANNRA) to help develop and harmonize state-level cannabis programs across the US. The group, which isn't taking a position on legalization, will be led by Norman Birenbaum, who heads up New York's cannabis program.

Chart of the week

Both the US' medical and recreational markets are expected to nearly double in the next five years, according to New Frontier Data. While the adult-use market is expected to grow from $10.6 billion to $19.1 billion by 2025, the medical market is expected to grow into a $16 billion market over the same timeframe: