How Consolidation Will Reshape the Cannabis Industry


Ryan Allway

May 21st, 2021

News, Top News


The U.S. cannabis industry has experienced tremendous growth over the past decade as states liberalize their cannabis laws. According to BDSA, U.S. legal cannabis sales grew 46% to $17.5 billion in 2020, driven by gains in established adult-use markets in California and Colorado. Currently, adult-use is legal in 15 states and medical use is legal in 36 states.

Despite these gains, the lack of a federal cannabis framework remains a key challenge for multi-state operators (MSOs) with national ambitions. Each state has its own unique regulations and nuances when it comes to cannabis and it has been difficult for MSOs to effectively scale their operations across a large number of states.

Let’s take a look at how these trends could lead to another wave of consolidation within the industry and where investors should look for opportunities.

Click here: Learn how Fiore Cannabis is well-positioned within the cannabis industry given its robust turnaround.

Expected Industry Consolidation

The cannabis industry’s answer to the patchwork of state cannabis laws has been consolidation. While some MSOs have successfully expanded beyond one state, few have managed to expand into every state where cannabis has been legalized. Companies with a narrow focus have also tended to outperform those that have stretched their resources.  

The last major period of cannabis consolidation was a land grab that resulted in overstretched operations and massive losses when the market experienced a downturn. This time around, acquisitions have been much more intentional and accretive with a focus on high-quality management teams running profitable operations in strategic states. 

For instance, Trulieve Cannabis Corp. (CSE: TRUL) recently agreed to acquire Harvest Health & Recreation Inc. (CSE: HARV) in an all-stock deal valued at $2.1 billion. While Trulieve has a presence in the Northeast and Southeast, Harvest Health has built up a sizable presence on the West Coast and provides access to Arizona’s adult-use market. 

Potential Opportunities to Watch 

Investors interested in the cannabis industry should keep an eye on companies that could become attractive acquisition targets. In particular, the most attractive acquisition targets will likely be well-run companies that have built up a strong presence in target states, offering an accretive acquisition that goes beyond just an asset purchase.

For instance, Fiore Cannabis Inc. (CSE: FIOR) recently divested its Canadian and Washington-based assets to strengthen its focus on Nevada and California. With a small customer-focused team, the company achieved a positive adjusted-EBITDA in January and is building out its Nevada-based Apex facility to 50,000 sq. ft. over the coming year.

Fiore Cannabis’ modular grow rooms. Source: Fiore Cannabis

Click here: Download the company’s investor presentation and receive updates on its progress over time.

In addition to being a profitable company, Fiore Cannabis cultivates unique genetics using proprietary technologies that maximize quality and minimize loss. The Fiore Super Glue won first place at the 2019 Las Vegas High Times Cannabis Cup with the highest THC results at 26.73% and over 20mg of total terpenes, providing a very sticky feel and unique flavor.

The combination of a positive adjusted-EBITDA, award-winning products and targeted operations in California and Nevada are hallmarks of a potential acquisition target. At the same time, Fiore Cannabis’ own management team remains open to M&A opportunities should they arise but remains narrowly focused on its operations in the near-term.

Looking Beyond Traditional MSOs

The cannabis industry’s consolidation has extended beyond MSOs to include Canadian companies and even medical cannabis firms. For instance, Tilray Inc.’s (NASDAQ: TLRY) (TSX: TLRY) merger with Aphria Inc. created the largest cannabis company in the world by revenue and surpassed Canopy Growth Corp. (NYSE: CGC) (TSX: WEED) in Canada.

Despite its large size, Canada’s cannabis industry hasn’t seen the same growth rates as the U.S. market in recent quarters. Fiore Cannabis’s leadership team saw the writing on the wall and divested their British Columbia-based assets to focus on the U.S. and cannabis investors may want to do the same until the Canadian market starts to pick up again. 

A better opportunity for investors may be international markets beyond North America, as well as alternative products. For instance, Aphria’s CC Pharma subsidiary in Germany drove nearly all of the company’s distribution revenue and the company’s acquisition of SweetWater Brewing Company bolstered its presence in the U.S. beverage market. 

Looking Ahead

The cannabis industry is likely to experience another wave of consolidation. In the U.S., regional businesses with strong management teams operating at or near profitability. Fiore Cannabis Inc. (CSE: FIOR)—could be an attractive way for larger MSOs to execute on their national ambitions and realize gains from economies of scale.

In addition, investors may want to keep an eye on international companies and those involved in targeting other product categories, such as beverages, which could also be potential M&A opportunities over the coming quarters.

For more information about Fiore Cannabis, visit the company’s website or download their investor presentation.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


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