More Industry Consolidation and 13 Stories from New Cannabis Ventures

This is a copy of the August 5th edition of our weekly Newsletter, which we have been publishing since October, 2015.


Cross-industry and cross-border investments have been on a rise since Constellation Brands forged its strategic partnership and investment into Canopy Growth last October. Just these past few weeks we have seen another strategic partnership between Big Alcohol, Molson Coors and Canadian cannabis producer, Hydropothecary, as well as the acquisitions of private LPs by public LPs, with both Emblem and VIVO Cannabis (formerly ABcann) acting as consolidators.

Prior to the Constellation deal with Canopy Growth, the only notable M&A had been Canopy Growth buying Bedrocan in late 2015 and then Mettrum in early 2017. More recently, the company is in the process of acquiring Hiku Brands, which has a retail focus. Since October, Aurora Cannabis has acquired two of its largest competitors, CanniMed and MedReleaf, to create a platform that has the highest current revenue run-rate of the entire sector. Aphria bought Broken Coast in early 2018, extending beyond its singular focus on greenhouse production in Ontario to pick up a high quality BC indoor grower. We saw also earlier this year a global tobacco company, Alliance One International, acquire 75% of a privately held LP, Canada’s Island Garden.

So, what’s next? We expect to see more consolidation, though most likely not by Aurora or Canopy Growth. Instead we anticipate more cash-rich public LPs consider adding existing capacity through M&A rather than using their cash to build out new capacity. This appeared to drive Emblem’s decision to acquire Natura Naturals. Buying rather than building could also provide diversity geographically or by mode of production.

We also believe that Big Pharma will inch forward soon. Pharmaceuticals displacement by cannabis is going to happen with or without Big Pharma, and we expect the industry to be proactive in Canada, where it is free to easily conduct clinical trials. Several LPs are pursuing this currently. We are aware of relationships between two larger LPs and pharmaceutical companies, but there is no equity investment yet. This will likely change, and we think there could be a full acquisition over the next few months, though this would likely not involve one of the larger LPs.

Perhaps the consolidation we envision in the coming months will be a catalyst to end the recent slump in stock prices.

Canadian LP INDIVA, on the cusp of commencing sales, has formed several key strategic partnerships that will bring successful U.S. IP and brands into Canada.

To learn more about INDIVA, visit the company’s Investor Dashboard that we maintain on its behalf, and then click the blue Follow Company button.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

The Benzinga Cannabis Capital Conference is a must-attend event for investors focused on the global cannabis markets. Taking place in Toronto in less than two weeks, the conference has some compelling panel discussions as well as 27 presentations from public and private companies.

We look forward to seeing you there!

To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers.

View the Public Cannabis Company Revenue Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than $2.5m per quarter.

Consider subscribing to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013 for more in-depth information and market intelligence about the publicly traded cannabis sector.

Discover your place in the cannabis industry by visiting our Careers and Jobs Page and learn which companies are hiring aggressively.


Alan & Joel

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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