The largest cannabis retailer in the U.S. is on track to become the world’s biggest legal seller through a planned billion-dollar takeover, a sign of the seismic changes in the weed industry as a wave of M&A takes place among the major players. They are positioning themselves to be the leaders in the fast-growing industry as they wait for the U.S. federal government to legalize marijuana.

Massachusetts-based Curaleaf Holdings (CURLF.OTC), one of the biggest U.S. marijuana companies, will buy privately held Cura Partners of Portland, Oregon, a maker of cannabis oil. The wholesaler is best known for its Select brand marijuana products, which it distributes in over 900 dispensaries and is the number one seller in the U.S. market. The two companies posted a collective $205 million in sales in 2019, per a detailed story on the merger in Barron’s.

The Cannabis Gold Rush: 6 Recent Deals

  • Curaleaf, Cura Partners; $950 million 
  • Canopy Growth, Acreage Holdings; $3.4 billion
  • Cresco Labs, Origin House; $825 million
  • Cresco Labs, VidaCann; $120 miillion
  • Harvest Health & Recreation, Verano Holdings; $850 million
  • Hexo Corp, Newstrike Brands; $197 million

Data: Barron's; Other Sources

“We were already a leader of the cannabis industry,” said Curaleaf Executive Chair Boris Jordan. “But this transaction makes it clear that Curaleaf stands alone at the top.” Curaleaf operates in 12 states with 44 dispensaries, and recently announced a deal with CVS Health Corp. (CVS) to sell its CBD products, which contain a non-psychoactive cannabis compound. Jordan says the merger will quickly realize cost savings, per Barron’s.

Major Players Bet on US Legalization

Canada’s Canopy Growth recently agreed to buy Acreage Holdings, another of the most valuable U.S. sellers, offering it access to the key U.S. market once cannabis becomes legal under U.S. federal law. Meanwhile, Chicago-based and Canada-listed Cresco Labs (CRLBF), one of the largest U.S. cannabis chains, is acquiring Origin House. Cresco operates 22 retail locations, but will have licenses for 56 when it closes yet another merger with Florida-based VidaCann.

All of this comes as analysts at Barclays estimate the total U.S. cannabis market would be valued at $28 billion in annual sales if legalized today, with the potential to skyrocket to $41 billion by 2028. Within the highly divided U.S. political atmosphere, cannabis is one of the only issues that has received bipartisan support.

Looking Ahead

“From a political standpoint, the positive momentum is certainly accelerating,” said Cresco Lab’s CEO Charli Bachtell in a recent conference call, per Barron's. He is confident that the federal government will ease cannabis restrictions within the next 12 to 18 months. The federal green light for U.S. cannabis producers would mark a huge victory for many companies seeking to expand their franchises and is likely to spark more mergers.