2021 M&A Frenzy
According to Viridian Capital Advisors, as of August 15th, there have been 200 deals in the cannabis industry. This number is four times as many compared to the same time in 2020. Of the 200, 71% of the deals were US transactions. This uptick can be mainly attributed to pent-up demand caused by the lack of M&A during the pandemic. “The pandemic certainly slowed down M&A transactions, but it didn't do away with them completely, particularly in big markets like California where there's still a lot of independent operators,” said Tracy Gallegos, a partner at the law firm Duane Morris who works on cannabis transactions. “It's going to continue to increase in my view for the next two, three years.” The increase can also be attributed to increased optimism of federal marijuana restrictions being lifted shortly. However, we are still waiting on this aspect to come to fruition. The final and most important reason is that the US cannabis industry is in its shakeout phase as it matures and consolidates.
Cronos Ginkgo
CRON is a LONG
Cronos will issue Ginkgo approximately 1.5 Million common shares valued at about $10 Million as part of a productivity milestone Ginkgo reached. Ginkgo is a platform that allows customers to program cells as easily as computers. “Cell programming can enable access to rare and important molecules found in nature, such as cannabinoids, and we’re proud to be able to help many different companies across industries develop strategies for using biology to innovate new products,” said Jason Kelly, CEO and Co-Founder of Ginkgo Bioworks. “We’re thrilled to see the progress our partnership with Cronos Group has made in the three years we have been working together and consider it a demonstration of how much can be accomplished when a leading-edge company applies our platform.” This milestone will support Cronos's planned CBG launch this year. CBG is similar to CBD, but it energizes rather than calms. CBG also has a few disease-preventing properties, including glaucoma and Parkinson's.
NJ Cities Dropping Like Flies
As part of the legalization process, New Jersey municipalities have the option to opt-out of recreational use sales within their city lines. These municipalities had until the 21st to decide on whether or not to prohibit recreational cannabis establishments. The caveat is, if the deadline passes and a municipality does not act, it will automatically be defaulted to a having rec sales. The issue with that is most municipalities are going with the "say no for now and then wait and see" approach. California had a similar rule with licensing, and most cities went with this approach as well. Cities will then slowly start opting in once they see the tremendous revenues other municipalities bring from this legislation. As of yesterday, an astounding 70% of all towns have opted out of sales.
