At the recent Benzinga Cannabis Capital Conference, Tony Schor, CEO of Investor Awareness, offered a candid look into the challenges and opportunities facing cannabis companies, particularly in the realm of mergers and acquisitions (M&A). Schor, a seasoned expert in the cannabis industry, discussed how companies are navigating financial obstacles while finding creative ways to secure capital and expand in a tightening market.
M&A Activity Picks Up in Cannabis
Schor pointed to a renewed focus on companies with strong revenue streams as mergers and acquisitions gain traction. “People are looking for revenue-producing, not necessarily distressed, but revenue-generating cannabis companies,” he said, noting that investors are accumulating these assets for future sales opportunities.
Schor emphasized that the M&A landscape is changing. “It's not necessarily the large MSOs doing the transactions, but new independents and cannabis operators who have left and now are coming back to the space,” he said.
Capital Challenges Remain a Major Hurdle
A recurring theme in Schor's discussion was companies’ difficulty securing capital, regardless of their size or market position. “Cash capital is tough to find,” he stressed. Both public and private cannabis companies are feeling the squeeze, with public markets offering limited opportunities for growth and private companies struggling to access institutional money.
“Private companies are finding money, but their end game is to go public,” Schor added, highlighting the long-term goals many cannabis businesses have. However, the lack of access to federal banking presents a significant challenge, limiting growth potential. “Without federal banking reforms, institutional support remains out of reach,” Schor said.
The Power of Partnerships
Schor concluded with a call to action for cannabis businesses to embrace partnerships to overcome capital constraints and expand their operations. He stressed the importance of collaboration in the industry and offered practical advice for brands looking to enter new markets. “The only way this industry survives is if you talk to a new person and discuss potential collaborations and partnerships,” Schor said.
Partnerships can be a lifeline for companies looking to grow without heavy capital investment. “Perhaps you're a brand in Colorado and want to go to other markets, but you don't have the capital. Find another brand or a manufacturing partner in another market,” Schor said, highlighting how businesses can expand without taking on significant financial risk.
Schor's insights at the conference provided a roadmap for cannabis companies grappling with financial hurdles and seeking ways to grow. By focusing on revenue-producing acquisitions, navigating capital challenges, and leveraging partnerships, cannabis businesses can better position themselves for success in an increasingly competitive environment.
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