Canada has no choice but to bow to the market forces of its neighbors. The cannabis trade has been an exception since Ottawa became legal in 2018 and has provided an advantage to Canadian companies. Companies in the country that want to buy competitors need to act quickly to take advantage of the momentum. According to Bernstein, cannabis sales in Canada will be about $ 2 billion by 2020, up from $ 17.5 billion in legal sales in the United States, which is illegal at the federal level. Even if that does not change, Bernstein predicts that the U.S. market will be worth $ 40 billion by 2026.
The legislation passed by Republicans in November to decriminalize marijuana has raised hopes even more. But multi-state operators such as Green Thumb Industries and Cresco Labs are already at risk enough to increase productivity and raise their reserves. Meanwhile, Canada’s peak is eroding. Exaggerated and unreliable ratings have declined; Canopy growth lowered its profit expectations; Hexo et al cut their templates.
And time is running out. For Canadian operators it has many times more – more or less in line with technology companies like Meta or Netflix – despite the potential for legalization in the South and Montreal Bank considers it a more profitable operating model than the United States. , The ability for vertical integration of several states, given among others. It suggests that even if it is not legalized at the federal level, the spread will not last.
Canadian providers who want to merge need to find targets in a timely manner. Canoby Growth paid nearly $ 300 million in October for the right to purchase Vana, a Colorado-based grocery company, if the United States legalizes marijuana after concluding a similar deal with Acre. Putting the investment forward is risky, but that moment may pass if Canadian companies do not take advantage of it.
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