Viridian Chart Of The Week: The US Dominated Cannabis M&A Activity In 2020

• Since Q3’2019 we have been commenting that the U.S. would become the main target region for cannabis company acquirers. We looked back through the Viridian Cannabis Deal Tracker and here are the numbers --  U.S. cannabis companies accounted for over 90% of M&A consideration in the 2nd half of 2020.

• During the first quarter of 2019, Canada had the highest share of M&A consideration, but as the year progressed, cracks in the Canadian business model began to become apparent: excess cultivation capacity; scarcity of retail outlets; excessive opex; and revenues that refused to grow as expected.

• The change in the trend began to be seen in the 3rd and 4th quarters of 2019 and into the 1st quarter of 2020, where the U.S. dominated the M&A scene, attracting between 59% and 84% of total consideration in each quarter.

• 2019 had a measurable sprinkling of international deals, attracting between 5% and 20% of consideration. Since the beginning of 2020, however, this international component has disappeared. International deals have accounted for less than 1% of consideration in 2020.

• We estimate that the U.S. will continue to drive industry M&A activity in regard to the location of both buyers and sellers.

The Viridian Cannabis Deal Tracker is a proprietary information service that monitors capital raise and M&A activity in the legal cannabis and hemp industry. Each week the Tracker aggregates and analyzed all closed deals and segments each according to key metrics:

• Industry Sector (one of 12 sectors, from Cultivation to Brands)

• Dollar value of the transaction

• Region in which the deal occurred (country or U.S. state)

• Status of the company announcing the transaction (Public vs. Private)

• Deal structure (equity vs. debt)

• Key deal terms (Pricing and Valuation)

The Viridian Cannabis Deal Tracker provides the market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital allocation and M&A strategy.

Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $50 billion in aggregate value.

Lead image by Ilona Szentivanyi. Copyright: Benzinga.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.