Cannabis technology startups, including those that enabled home delivery, received a big boost during the pandemic as more and more Americans partook in the growing number of legal states. This has ignited investor interest in companies that provide everything from retail and e-commerce software to cultivation management tools. This week has seen some interesting large investments and acquisitions in the industry.
Dutchie is a cannabis tech company that created an app to connects customers with local cannabis retailers. Dutchie recently raised $200 million in a Series C, to value the company at $1.7 billion. Many big name investment groups were involved, including Tiger Global, Thrive Capital, and Casa Verde Capital, which is co-founded by Snoop Dogg. In addition to raising this large amount of capital, Dutchie announced the acquisitions of cannabis retail platform Greenbits and cannabis software provider LeafLogix.
Greenrose Acquisition Corp. (GNRS), a cannabis-focused special purpose acquisition company, or SPAC, has agreed to buy four U.S. cannabis companies for $210 million. Greenrose will be acquiring Shango Holdings, Futureworks, Theraplant and True Harvest. Combined, these companies run a number of dispensaries, cultivation and processing facilities across seven states. Greenrose Acquisition Corp. will change its name to the Greenrose Holding Company before completing the purchases of the four companies.
GrowGeneration (GRWG) has acquired Char Coir, producer of popular hydroponic growing materials made from coconut fiber. GrowGeneration currently has 50 stores across the U.S. and sells growing supplies and nutrients for both individual and commercial cannabis growers. This acquisition is expected to generate an additional $15 million in sales this year.
Dutchie is currently privately held but I am going to be keeping an eye on this company going public. Greenrose Acquisition Corp. (GNRS) and GrowGeneration (GRWG) are currently being traded on the NASDAQ, although Greenrose is planning to move from the NASDAQ to the OTCQX Best Market. What do you think about these companies? Leave me a like and drop a comment with your thoughts about investing in the cannabis industry.
British American Tobacco (BTI) has become a big player in the cannabis industry with a 20% acquisition of Canadian company OrganiGram (OGI). This deal cost British American Tobacco $220 million Canadian dollars, or about $176.6 million American, to purchase 58 million shares of OrganiGram. British American Tobacco is one of the largest tobacco companies, with a portfolio of brands including: Camel, Newport, Kool, Lucky Strike, and Pall Mall. BTI also produces Vuse vaporizers as well as a number of smokeless tobacco brands.
Experts say this deal is less about the Canadian market and more about laying the groundwork to capitalize on the growing global marketplace for cannabinoid-based products and delivery systems. This partnership is a strategic collaboration with a focus on research and product development. News of this partnership have caused both BTI and OGI stock prices to surge in the past couple days.
Other news causing some buzz in the cannabis industry came Thursday morning when Mexico’s Chamber of Deputies passed landmark legislation to legalize recreational sales in the country. The Mexican Senate is expected to back the bill in the coming days. Mexican President Andres Manuel Lopez Obrador’s party strongly backs the proposal and he is expected to sign the bill after the Senate passes it. Legalizing cannabis in Mexico would make it the largest country to do so, with it’s population of almost 130 million people.
Mexico would dwarf the Canadian (pop. 37.6 million) and Uruguay (3.4 million) markets, and put the U.S. sandwiched in between two fully legalized countries. This will put added pressure on the U.S. to federally legalize cannabis. Like I mentioned in my previous blog regarding cannabis, 15 U.S. states and 3 U.S. territories including Washington D.C. have already legalized adult recreational use, now our neighboring countries to the North and South are legal.
The big question is when will the U.S. end it’s federal prohibition on cannabis and allow the flood gates of tax revenue to open. Large corporations are waiting on the sidelines ready to take action. I personally think this industry is a great investment opportunity because it is so new with so much room to grow, I equate this to investing in the internet back in the 90s. What are your thoughts? Leave me a comment and let me know what you think about the cannabis industry as an investment opportunity.
Just a few years ago, you would have never found these two words in the same sentence let alone be the topic of conversation amongst investors, but a lot has changed ever since Colorado and Washington went rogue and legalized cannabis at the end of 2012. Since then, the total number of states that have legalized the plant for adult recreational use has jumped up to 15 states plus three territories including Washington D.C. This week the governor of Virginia is expected to sign the bill to legalize adult recreational use in his state and will make it the 16th state to do so. Twelve other states currently have recreational legalization measure on the table also. Beyond that, it is legal in 36 US states for medical purposes.
Our neighbor to the north, Canada, legalized cannabis in 2018 and many in the US think that the federal government is currently not far behind them, especially considering the number of states that have already legalized it. With the legalization of cannabis, the opportunities for companies to grow in this industry has exploded. Another major milestone happened in 2018, the cannabis company Cronos Group became the first in the industry to receive SEC approval and be traded on the US stock exchange. Since then, many new companies have emerged onto the market and this is proving to be a highly competitive industry.
News that is fueling this fire is that last month, the Senate Majority Leader Chuck Schumer pledged that he, Senate Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) would release a draft bill to end federal marijuana prohibition “in the early part of this year.” More recently, this past Friday Senate Majority Leader Chuck Schumer sent out a fundraising email to supporters where he discussed Democrat’s agenda for change this year, where he reiterated the fact, “It’s time to decriminalize marijuana nationally.” All this talk of federal legalization has the industry waiting in anticipation. Although companies are already being traded on the stock market, full federal legalization would not only open the flood gates of potential customers but it would also give everyone the green light to go 100% in building operations across the country.
Some of the companies leading the way in the new legal cannabis market are Canopy Growth, Tilray, and Aurora Cannabis. These are three of the biggest names in the industry but like I mentioned earlier, this is a blossoming industry with a lot of competition vying for space. Leave me a comment on what are your thoughts on investing in cannabis? Is it a good idea to invest now or wait until full legalization? Will it be too late to invest then?