This week's business news: the cannabis industry booms in North America

The cannabis industry is booming. This is reflected in extraordinary capitalization rates (up to 400% and even 500% for Canopy and Tilray since 2017) and industry consolidation, the process by which different companies merge or buy each other out to form a single company. This quick recap of last week's activities shows just how important these trends are in the cannabis industry.

Raising capital

In Canada, cannabis companies have experienced stock market declines since legalization became effective. Investors are no longer speculating on market projections, but on concrete results. Companies have to justify their activities and continue to expand.

To this end, Tilray, one of Canada's largest cannabis producers, has just closed a $450 million convertible debt offering. The company's objective is to increase its working capital (the amount of resources not used by fixed assets that will cover the company's expenses for long-term investments) and prepare for future acquisitions.

In the U.S., companies are looking to expand their operations to be able to compete with Canadian firms. Innovative Properties, a San Diego-based real estate investment company, has closed a $119.6 million takeover bid to expand its portfolio of dispensary-rented properties. On that note, dispensary leasing in the U.S. can lead to complications because insurers can refuse to cover damage due to federal prohibition (financial services are regulated at federal level).

Loveland, Colorado, a company that works with and processes CBD, has just closed a $35 million Series A financing round (the different categories are differentiated by investor type and company maturity) to expand its operations. A record for a cannabis company. This proves that the cannabis sector now has the confidence of investors.

Mergers and acquisitions (M&A)

Since the end of last week, mergers and acquisitions in the cannabis community have reached double last year's level, a sign that industry consolidation is still ongoing.

Tilray has announced the acquisition of its Chilean import and distribution partner Alef Biotechnology valued at $3.8 million. The deal included 250,000$CA in cash and shares in Tilray worth 4.75$CA million. This kind of deal is indicative of the fact that major cannabis companies can now use their shares as a bargaining chip for future acquisitions.

Nevertheless, the gold medal goes to MedMen, in the United States, which has just acquired the entire dispensary chain PharmaCann for $682 million. This is the largest acquisition to date in the American cannabis industry. It enables MedMen to acquire some 66 retail licenses and 13 cultivation licenses in 12 different states. Already a leader in the US cannabis scene with 10 production facilities, MedMen considerably expands its horizon and its production and distribution capacity, while reinforcing its presence throughout the United States.