Cannabis sparks corporate interest as it moves toward the mainstream
When New York took the first step toward legalizing hemp last week, Gov. Andrew Cuomo praised the state as the nation’s “progressive capital.”
Comments like this are helping to move marijuana to the mainstream, thinking about the billions of dollars of revenue that governments and businesses can get for personal use with liberalization.
The US senses where 16 states have it legalized for recreation marijuana, under Biden administration, will be subject to federal legislation, with investors and consumer goods groups making new bets on the creation of the legal marijuana industry.
Cannabis companies collected nearly $ 4.3 billion in debt and equity in the first quarter of 2021, up from $ 1.6 billion in the same period last year, according to Viridian, a financial advisory firm specializing in the sector.
The number of mergers and acquisitions between January and March, 58, was almost three times higher than in the same period last year, as teams expect to gain scale. A bunch of deals come after Aphria listed in Toronto he presented the merger The U.S.-listed Canadian rival Tilray is set to create the world’s largest cannabis group through sales in December, with combined revenues of $ 685 million.
But it is not the producers who want to make money in the growing industry. British American Tobacco last month it took a 20 per cent stake in the Organigram weeds for 126 million euros, following investments by rivals in the Altria and Imperial Brands sector.
David O’Reilly, head of BAT scientific research, said the tobacco industry was “moving away from cigarettes over time” to study that the sector was natural “the space for cannabis is very close to tobacco and nicotine.”
The London-listed cigarette maker Lucky Strike is initially targeting CBD, a cannabinoid that users don’t feel stone at and will be increasingly vaporized by consumers.
Marlboro producer Altria and Canadian brewers Constellation Brands and Molson Coors, among beers like Corona and Carling, respectively, were among the first consumer groups to try cannabis about three years ago, when Canada became the first major economy in the world to legalize it. drugs.
Altria and Constellation both forced to write hundreds of millions of dollars in investments after entering the market as hemp stocks There were excessive expectations for a Canada with a smaller population than California.
But Constellation CEO Bill Newlands told the Financial Times that the beer’s first move has given it a “tremendous start”.
“From now on we thought it would be a big hemp in the world’s major markets,” Newland said of Canopy Growth, a Canadian cannabis group with more than $ 4 billion in “offensive investment,” which last year saw the brewery rise to 39. percentage share.
Constellation has estimated that the illegal cannabis market in the U.S. is worth about $ 50 billion, and Newlands noted that “this is not a non-existent sector, it has not existed in a legalized manner.”
Scott Cooper, CEO of Truss Beverages, a joint venture between the Molsonen and Hexo cannabis group, said Molson’s initial exploration of the sector was defensive, as the brewer was concerned that legalizing cannabis would require beer and other types of light. alcohol.
“Intervals between cannabis and alcohol overlap, such as relaxation or smaller social gatherings,” he said. “It became clear that hemp would come out as a competitor.”
Legal marijuana sales exceeded $ 21 billion by 2020, according to BDSA cannabis data tracker. The state of California said in November that the legalization brought in $ 1.8 billion in revenue in less than two years, while New York stressed tax and labor benefits, emphasizing the reason in the minds of lawmakers who coincide with pandemic depleted finances. .
Profits remain volatile and the industry faces major hurdles. Selling over the Internet, for example, is banned in most U.S. markets and cannabis groups struggling to access financial services because banks don’t realize they are managing money made with something that is outlawed at the federal level.
And as the professional sector begins to flourish, there are a large number of people in U.S. prisons for selling or possessing marijuana, and nearly half a million arrests have been made for these crimes in 2019, according to the Federal Bureau of Investigation.
Cooper said the stigma surrounding cannabis use was quickly dispelled in just a few years: “It’s almost like another time and a world that’s changed a lot. If you have a conversation with a young person today, they can’t think of a time when people would overcome that internal struggle. [about pot]”.
Truss’s non-alcoholic beverages contaminated with CBD and THC cannabinoids are currently only available in Canada, as the group has opted to be marketed in the United States while the federal cannabis remains illegal.
Still, Curaleaf in Massachusetts, which has so far been the largest seller of hemp in the sector in terms of sales, is betting that Europe will soon move towards liberalization for recreational use. He agreed last month A $ 300 million plus for Emmac, while one of the largest producers of marijuana in the region Mexico it surpassed the tremendous legalization of marijuana.
As expectations in the hemp market increase, companies want to boost their investments. Constellation, Molson and Altria are members of an industry lobby group launched in March that seeks to influence how the legal hemp market is structured and regulated.
“When you have large multinational corporations represented by congressional lobbyists, the landscape looks different,” said Nick Vita, a former banker at Goldman Sachs and one of the founders and CEOs of Columbia Care, which manages more than 100 cannabis facilities. Across the US, including crop sites and medications.
“I think 2021 is the year that cannabis moves into normal conversations,” Vita said.