Canadian MMJ Space Could Evolve As Big Firms Merge

Canada_flag_halifax_9_-04The medical marijuana industry in Canada is on the brink of major changes, instigated by the merging of major companies. Most recently, two of the country’s biggest names in medical cannabis have just made a deal that could set up Canada’s first dominant marijuana company.

Tweed Marijuana, Inc (TWD) announced on June 24 that it has reached an agreement to purchase Bedrocan Canada (BED), with shares worth $61 million. These two licensed medical cannabis ventures are two of Canada’s largest, which means that their merging will likely create a giant in the industry.

For other legal marijuana producers and dispensers, this could also be a reason to consolidate in order to stay competitive in the face of the new company.

According to The Financial Post, there are currently 48 companies in the Canadian marijuana space, and this may be too many given the present dynamics of the market. The merging of two major firms not only could stomp out small or weak businesses, but also drive other big players to band together. Merging can help companies increase market share, avoid becoming takeover targets, and remain competitive, suggested the Post.

Among the big cannabis firms in Canada are Organigram Holdings, Mettrum Health, and Aphria.

The fusing of Tweed and Bedrocan is not the only one that these players have to consider. There is also the concern that companies from outside Canada are snapping up the country’s licensed growers and sellers. PhytoTech Medical is a recent example, after it became the second Australian firm to enter the Canadian market, and it did so by merging with MMJ Biosciences.

In addition, according to the Post, the rate of consolidation in the industry could accelerate if recreational marijuana is legalized in Canada. The possibility of this legalization has already been raised when prime minister candidate Justin Trudeau said he wanted to make it happen.

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