Why some cannabis executives are refocusing their M&A goals


(This is an abridged version of a story that appears in the May-June issue of Marijuana Business Magazine.)

Thanks to a drop in business valuations and difficulties obtaining capital, mergers and acquisitions in the marijuana sector are happening more slowly than they did as recently as 2018.

Gone are the days when large, publicly held marijuana companies seized competitors in an effort to expand market reach. But that doesn’t mean investors and well-capitalized entrepreneurs can’t pull off successful deals.

In fact, Morgan Paxhia, managing director of San Francisco-based Poseidon Asset Management, believes “it’s an incredible time to be an investor.”

The current shift in the marijuana industry simply “means we’re getting very attractive, rational valuations,” Paxhia added.

“We’re able to build another portfolio that can generate some really strong return profiles.”

To further explore the new paradigm, Marijuana Business Magazine spoke with cannabis industry stakeholders to get a feel for how investment bargain hunters should proceed.

They offered the following important considerations:

Marijuana Business Magazine also took a look at the drop-off in cannabis M&A deals from 2018 to 2019 and got some insights from a marijuana attorney.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.