The buzz about mergers and acquisitions in the cannabis sector is starting to attract investors' attention again.
The development is seen as a sea change for the industry, which has seen a major decline in headlines. making corporate acquisitions since the industry's breakout in late 2017 and in 2018.
In the past month, a number of major corporate realignments have reset momentum in the industry.
One of the most significant deals in May was Trulieve Cannabis' (OTC:) $2.1 billion (C$2.54 billion) acquisition of Harvest Health & Recreation (OTC:) (CSE:). Florida-based Trulieve bought out its state rival and expanded its market dominance. Also last month was Hexo Corp's (NYSE:) (TSX:) $768 million purchase of Redecan, a privately owned Canadian licensed cannabis grower.
But the biggest deal of all was the $7.2 billion blockbuster acquisition of UK-based GW Pharmaceuticals (NASDAQ:) by Ireland-based Jazz Pharmaceuticals (NASDAQ:).
]Jazz Weekly Chart
GW Pharma is considered a leader in the development and commercialization of cannabinoid-based prescription drugs. It is also the maker of Epidiolex, the first cannabidiol-based treatment approved by the U.S. Food and Drug Administration for the treatment of seizures related to epilepsy in young children.
In a statement released by Jazz announcing the acquisition, Jazz chairman and CEO Bruce Cozadd emphasized the importance of Epidiolex:
"We are delighted to welcome our GW colleagues to Jazz as we mark a transformative milestone in creating an innovative, fast-growing, global biopharmaceutical leader in neuroscience with a global commercial and operational footprint. The addition van GW is diversifying our commercial portfolio and innovative pipeline with therapies that are complementary to our existing businesses, including Epidiolex, a fast-growing commercial product with near-term blockbuster potential.”
Tilray and sundial make impressive gains
Building on industry victories in May, June continued to show itself as a good month for much of the cannabis sector.
Two cannabis companies in in particular, it did very well, with a double-digit increase in their inventory valuations since the beginning of the month – Tilray (NASDAQ:) (TSX:) and Sundial Growers (NASDAQ:).
As of Monday's close, Tilray shares are up just over 13.5% so far this month. Just yesterday, the Canada-based cannabis grower, who just closed its merger deal with Aphria, gained nearly 5%.
Despite the latest one-day surge, Monday still wasn't the industry's best performer on Monday. That honor went to Cronos Group (NASDAQ:) (TSX:), which saw its shares rise 5.23% on the day to $9.06 on a reported 34.1 million shares traded. have been even more impressive. The medical marijuana producer that grows a wide variety of cannabis strains has a market cap of $2.03 billion (C$2.45 billion). In the first days of the month, shares rose nearly 25%, but some of those gains were shaved off. The stock closed at $1.16 yesterday, up 10.4% for the entire month.
The sector is supported by a number of factors. Rising momentum draining on regulatory hurdles in the US is certainly one. But positive headlines, such as the announcement last week by e-commerce giant Amazon (NASDAQ:) that it would support a US federal bill to legalize cannabis and make changes to company drug screening policies, certainly seem to have had an effect.
