The medical marijuana market is catching fire in the United States. Less than two weeks into the month of October, MedMen Enterprises (CSE: MMEN) has notched up four deals, and market giant Tilray, Inc. (NASDAQ: TLRY) has announced one.
MedMen, based in Culver City, California, is a leading cultivator, producer and retailer of state-sanctioned cannabis in the United States. At the beginning of October, it operated 18 licensed cannabis facilities in California, Nevada and New York, but that list keeps growing. Two of its recent targets are in Illinois, one in Arizona and one in California.
The largest of the MedMen deals (to disclose a price) was its acquisition of PharmCann LLC, one of the largest medical cannabis producers in the United States. The Chicago-based company cultivates, processes and dispenses safe, independently tested products. Its dispensaries (Verilife) and production facilities (Veriplant) operate in multiple states.
The resulting company (including the other three pending acquisitions) will have a portfolio of cannabis licenses in 12 states that permit MedMen to operate 79 cannabis facilities. MedMen will add licenses in Illinois, New York, Pennsylvania, Maryland, Massachusetts, Ohio, Virginia and Michigan. By 2030, that territory covers a total estimated addressable market of approximately $40 billion, according to Cowen Group.
At $682 million, MedMen claims this all-stock transaction is the largest deal in U.S. cannabis history. It could be, but most of the cannabis deals announced to date don’t disclose financial terms. In this case, however, MedMen will issue Class B Subordinated Voting Shares. PharmCann holders will own approximately 25% of the fully-diluted shares upon closing.
A second deal stretches MedMen’s reach into Arizona. There, WhiteStar Solutions LLC is selling Omaha Management Services, which owns Monarch, a medical cannabis license holder with dispensary, cultivation and processing operations, as well as exclusive co-manufacturing and licensing agreements with Kiva, Mirth Provisions and Huxton for the state of Arizona. The two remaining deals were for cannabis dispensaries in Oak Park, Illinois and Emeryville, California.
Tilray, based in Nanaimo, British Columbia, has one of the highest market capitializations in the field, approximately $13.4 billion (MedMen sits at $495 million). It’s roiled the equity markets in recent weeks after its shares surged more than 650% since their initial public offering in July, thanks to approval from the Drug Enforcement Administration to import marijuana to the United States for medical research. Shortly afterward, Tilray announced an offering of convertible notes, and closed its private placement of $450 million of 5.00% Convertible Senior Notes due 2023 on October 10.
Tilray’s October drug deal was much smaller, and further afield. The company paid CAD$5 million (USD$3.86 million) for marijuana cultivator Alef Biotechnology, in Santiago, Chile. Alef is licensed by the Chilean government to commercially produce medical cannabis.
We’ll see if this all goes up in smoke.
