As another week in the cannabis industry comes to a close, another massive deal has investors and observers buzzing about what’s ahead.
Here’s a recap of the top newsmakers and headlines that caught our eyes here at Investor Intelligence, plus a look at what we’re watching next week:
Is Curaleaf on track for $1 billion in sales by 2020?
Massachusetts-based Curaleaf dominated headlines in the industry this week with its 1.27 billion Canadian dollar ($949 million) acquisition of Oregon’s Cura Partners, owner of the Select brand of cannabis products.
We broke down the all-stock deal for you in our Rapid Reaction on Wednesday. It’s another example of cannabis companies joining forces for mutual benefit rather than looking to big players in established industries like beverages and tobacco.
Curaleaf said it can’t yet offer certain pro-forma financials on the deal, but that’s not stopping others from doing the math.
Seaport Global analyst Brett Hundley noted that the deal yields “substantial revenue synergies” – as high as $75 million – as Curaleaf brings the Select brand into Eastern markets.
According to Hundley, that could position Curaleaf to post 2020 pro-forma sales of between $965 million and $1 billion and pro-forma EBITDA of $200 million.
Another cannabis-infused beverage deal to watch
Add New Brunswick-based Moosehead to the growing list of Canadian brewers planning to sell nonalcoholic, cannabis-infused beverages.
Moosehead, the largest independent brewery in Canada, signed a definitive agreement to form a joint venture with Sproutly Canada, with each company holding 50% ownership.
If you’ve been following our coverage, you know the other Big Alcohol players striking deals in the space: Constellation Brands, Molson Coors, AB InBev.
The moves continue to point to two emerging investment opportunities:
- You can bet on a pure-play cannabis firms – such as Sproutly, Hexo, Tilray or Canopy Growth, which have aligned with a big beverage brands for access to capital and retail distribution chains that reach large consumer markets.
- Or consider one of the beverage giants that are moving into the space. The growth opportunity is less than a bet on pure-play cannabis firms, but if the infused beverage sector doesn’t take off, investors are still plugged into a company that’s operating in a less volatile market overall.
Other top stories worth your time
- The parent of the iconic cannabis magazine High Times will close its share offering by June 30 following multiple extensions that have raised concerns the company isn’t reaching its targets. Whether it will eventually obtain a wished-for Nasdaq listing or something else remains to be seen.
- The number of cannabis capital raises may be slightly down so far in 2019 over the previous year, but the amount of money raised is almost double.
- New Jersey’s medical marijuana market will need at least 15 additional cannabis cultivators in the next three years, according to information provided by the state’s MMJ regulatory agency.
- A major cannabis industry investor has made what is thought to be one of the largest private donations to Harvard and Massachusetts Institute of Technology to study marijuana’s health effects.
Next Week:
• May 9-10
I’ll be at IC3 West on May 9 and 10 for the third Institutional Capital & Cannabis Conference in Los Angeles.
Hope you can join me for two key panel discussions I’ll be moderating Friday: The Changing Face of Cannabis Investing and Crystal Balling the Future of Cannabis.
With that, enjoy the weekend. As always, feel free to reach out to me directly with questions, comments or feedback at lisabk@mjbizdaily.com.
Sincerely,
Lisa Bernard-Kuhn
Investor Intelligence Editor
