Two of Canada’s largest licensed medical marijuana ventures are merging, which will create the country’s first dominant cannabis company.
The deal may spur other cannabis producers and dispensers to consolidate to stay competitive with the new company formed by the merger.
The Financial Post reported that 48 companies currently occupy the Canadian cannabis space, which could be far too many given the current dynamics of the market. Other big players in the market – such as Mettrum Health, Organigram Holdings and Aphria – might have to merge as well to increase their market share, remain competitive and avoid becoming takeover targets, according to the Post.
Another concern is that companies outside of Canada will snap up licensed growers and sellers.
PhytoTech Medical, for instance, recently became the second Australian company to enter the Canadian market when it merged with MMJ Biosciences.
Justin Trudeau, a candidate for prime minister, has said he wants to legalize recreational marijuana. If that happens, the rate of consolidation could accelerate, the Post reported.