Most of the businesses growing, processing and selling cannabis across the United States are small independently-held entities. That may change in 2019 which looks like a big year for industry mergers, acquisitions and expansion. Large companies, like those in the food, tobacco and pharmaceutical industries have mostly stayed on the sidelines, held back by regulatory concerns, but are now expected to enter the market. The cannabis industry still has a mom and pop feel but that could change rapidly.
Cannabusinesses have been small, primarily because their products can’t be transported across state lines. Companies that want to expand to other states need to establish growing, processing and selling infrastructure in each new location, or form a partnership with a company in the other state. With a lack of access to banking and most capital, it’s been hard for small companies to make that kind of expansion happen.
A few have made that leap and are establishing footholds in states around the country. In 2018, some of the multi-state operators acquired additional licensed operators in new locations. By the end of the year, “We were seeing larger companies merge with one another,” said Kris Krane, president of 4Front, a retail and brand development company in the U.S. cannabis sector. As the industry continues to grow and mature, he expects to see more of this consolidation in 2019.
Jessica Billingsley, Co-Founder & CEO of MJ Freeway, an original seed-to-sale technology company, is herself working through a merger with MTech Acquisitions.