The Biggest Three Things that Happened in the Cannabis Industry
1. M&A Activity
Harvest Health acquires Verano Holdings for an industry-record $850 million all-stock purchase.
M&A activity in 2019 has been robust; the number of deals closed this year far outpacing the amount over the same period from last year. In March, Harvest Health acquired Verano Holdings for an $850 million all-stock purchase – the largest M&A transaction in the cannabis industry to date. The combined company will be one of the largest multi-state operators (“MSO”), as measured by licenses held and facilities permitted. Upon completion of the transaction, Harvest will hold licenses that will allow it to operate up to 200 facilities in 16 states and territories across the country, including 123 retail dispensaries.
2. Consumer Trends
CVS and Walgreens have announced plans to sell CBD-infused products in their stores, signaling CBD’s mainstreaming.
Walgreens has announced plans to sell CBD in 1,500 stores, while CVS is planning to sell Curaleaf CBD products in 800 of their stores. Cannabidiol, or CBD, is a non-psychoactive chemical compound found in the marijuana plant, which is used as a natural remedy for common ailments, including chronic pain or anxiety. According to a recent Cowen & Co. analysis, nearly 7 percent of Americans say they use CBD products, and the market could reach $16 billion by 2025.
3. Legislation Update
A congressional committee voted to approve the Marijuana Banking Bill, aimed at increasing marijuana businesses’ access to banks.
After days of debate, the House panel voted 45-15 to support the Secure and Fair Enforcement Banking Act. The bill, dubbed the Marijuana Banking Bill, would greatly expand marijuana businesses’ access to banks and other financial services. Current federal regulations prohibit banks from working with marijuana businesses, leaving those businesses to operate on a cash-only basis. The Marijuana Banking Bill also includes provisions aimed at expanding access to minority and women-owned cannabis businesses. Though the bill still needs to be passed by the full House, advocates are hopeful that this is the first significant step in a federal marijuana reform.