New York cannabis M&A is already heating up
- Struggling cannabis companies with licenses in New York are likely acquisition targets.
- Ascend Wellness said it would take a majority stake in MedMen's New York assets.
- There may be other deals to come as New York moves toward cannabis legalization.
As New York looks to legalize cannabis, companies are already making deals to enter what could be one of the largest markets in the US.
On Thursday, MedMen and Ascend Wellness said that they'd reached an agreement for Ascend to take a majority stake in MedMen's New York operations. Following the $73 million deal, Ascend will hold an 86.7% stake in MedMen's New York assets and have an option to acquire the rest.
Struggling companies that operate in New York's medical cannabis market could be attractive acquisition targets for companies looking to enter New York, experts told Insider.
MedMen has struggled to turn its operations around in recent years and analysts have pointed to the possibility of such a sale as the company looks for ways to stabilize its balance sheets. Recently, MedMen hired investment bank Moelis & Company to look at "strategic alternatives." Moelis served as the financial advisor to MedMen in this deal.
Several other cannabis companies are also likely targets.