The North American marijuana industry continues to grow like a weed, as most marijuana stocks have doubled or tripled their value over the past trailing year. With Canada on target for national legalization this July, the number of mergers and acquisitions (M&A) has been increasing as well, in preparation to meet consumer demands.
Canopy Growth Corp. (TWMJF), Canada’s largest MJ company in terms of market cap, started the trend in January when it purchased Mettrum Health. This move increased the company’s medical marijuana patients to just about half of the country’s eligible patients and increased its growing capacity. Canopy has been actively acquiring land as well greenhouse assets. In its most recent quarterly report, Canopy had 2.4 million square feet of growing capacity underdevelopment with the option of adding another 1.7 million square feet, in British Columbia.
Aurora Cannabis (ACBFF) recently made an unsolicited bid to acquire CanniMed Therapeutics (CMMDF) as an all-stock offer worth around $425 million. Although, CanniMed’s board has implemented a “poison pill” measure to obstruct the acquisition, Aurora has offered the company’s shareholders a substantial premium compared to the (CMMDF)’s share price before the unsolicited bid. This combined company would be able to produce somewhere around 130,000 kilograms of dried marijuana annually.
Another company that could be sought after is Canada’s major player Organigram Holdings (OGRMF). Organigram is expanding its market beyond just dried marijuana, with focus on extracts and oils. Higher margins are produced from the extracts and cannabis oils versus traditional dried marijuana. Organigram’s third-quarter operating results reported it sold almost 190,000 milliliters of cannabis oils. The higher-margin revenue from the oils drove the company’s net sales higher by 6%, year over year.
Another reason is that (OGRMF) set to become recreational weed supplier to the New Brunswick market. In September, Organigram entered an agreement with the New Brunswick provincial authority to supply a minimum of 5 million grams of dried marijuana annually, estimated to generate between $31 million to $47 million in revenue annually. Organigram is also preparing for the flood in demand from the recreational market, and in October it announced its plans to hire up to 140 new employees while tripiling the capacity of its existing grow. This move boosts the company’s grow capacity from 5,200 kilograms annually to around 25,000 kilograms.
Because Organigram has some major competition from the main players in Canada’s marijuana industry and since the its pockets aren’t as deep, an acquisition by a bigger, cash-rich player makes more sense for the company. For this reason, Organigram is a marijuana stock worthy of being on your watchlist.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
