More Mergers Expected as Cannabis Sector Heads Into New Year of Growth
CannabisNewsWire Editorial Coverage
DENVER, Feb. 20, 2019 /PRNewswire/ -- Several years of impressive growth are expected to continue in the cannabis sector in 2019, and companies are making the most of it through mergers and acquisitions.
- The cannabis industry has seen growth in acquisitions over the past two years.
- A large part of this comes from the emergence of the hemp/CBD market.
- Industry commentators expect these trends to continue.
SinglePoint Inc. (OTC:SING) (SING Profile) is tapping into this exciting potential through a strategy of well-financed acquisitions and investment in other cannabis companies. PotNetwork Holdings Inc. (OTC:POTN) has built up a series of subsidiaries and is now reaching out to mainstream markets with its products. KushCo Holdings Inc (OTC:KSHB) has recently established new supply arrangements that will increase its already growing profits. Following the legalization of hemp farming, CV Sciences Inc. (OTC:CVSI) has become one of the United States' first certified hemp producers. And Green Organic Dutchman (OTC:TGODF) (TSX:TGOD) (TGOD Profile) is building improved cultivation facilities to meet the demand of cannabis's growing customer base.
To view an infographic of this editorial, click here.
The Cannabis Merger Boom
Over the past year, the cannabis industry has seen a significant new trend emerge. So far, the industry has mostly been made up of small businesses, but a series of mergers and acquisitions have started to change the layout of the land. The larger, more confident cannabis businesses have started to absorb their smaller competitors, creating businesses with greater efficiency, vertical integration and increased market shares.
This boom in cannabis mergers and acquisitions extends beyond committed cannabis companies. Top-tier businesses have started paying attention to the sector, buying substantial holdings in cannabis companies. Cannabis companies themselves have encouraged this interest, seeking outside help to fuel their growth.
The Merger Market
For companies building a strategy around cannabis acquisitions, such as SinglePoint Inc. (OTCQB:SING), current trends are legitimizing what they already held to be true — that there's great potential in building larger, more diverse cannabis companies through mergers and acquisitions.
The numbers are clear. Eighty-six cannabis companies in the United States were targeted for mergers and acquisitions in 2017, and that number rose to 140 in 2018. That's a significant increase two years in a row for an industry that's previously been driven by small start-ups, and commentators expect the trend to continue. In Canada, recreational legalization has triggered an intensive period of ambitious growth. In the United States, the illegality of transporting cannabis across state lines has discouraged expansion beyond the state level, but companies are starting to overcome that barrier, finding ways to run nationwide businesses in a state-by-state market.
For SinglePoint, this means making moves such as the company's recent significant investment in TorusMed, an organization working on finding new ways to grow industrial hemp. Hemp is an important subset of the cannabis industry — and one that looks set to expand, thanks to federal legalization of the crop under the 2018 Farm Bill.
The bill allows cultivators to grow hemp for cannabidiol (CBD), an increasingly popular component, without the restrictions placed on other forms of cannabis. SinglePoint's work with TorusMed is aimed at producing more consistent crops of high-CBD hemp with lower costs because of TorusMed's greater efficiency. The investment appears to provide an effective way for SinglePoint to gain an advantage in the cannabis sector across the United States and beyond.
SinglePoint's investment in TorusMed isn't an isolated example. SinglePoint has built a solid strategy around acquisitions and investment. SinglePoint President Wil Ralston appeared on MoneyTV to discuss the company's financing options for acquisitions, and in November, SinglePoint announced that it had raised $5 million in fresh funding from its own investors for the explicit purpose of fueling this approach. Thanks to the confidence of the market in the future of cannabis, SinglePoint has had no trouble raising funds or gaining attention for its work.
A Growing Industry
One of the reasons SinglePoint has seen such success in finding funding is the wider growth of the cannabis sector.
In the United States, where SinglePoint is based, cannabis legalization has steadily been spreading on a state level. Thirty-three states have now made the drug legal for medical purposes, while 10 have made recreational cannabis legal. North of the border, Canada has become the first G8 country to legalize cannabis nationally, not only setting an international precedent but also generating interest from American companies. The spread of public health solutions to cannabis use over prohibitory ones has become an international trend, creating a global cannabis market.
Over the past five years, this trend has led in a surprising direction: hemp and CBD. Hemp is a form of cannabis that doesn't contain THC, the chemical that produces a high in users. Related to that trend, researchers have found growing evidence that CBD, a nonpsychoactive ingredient found in all strains of cannabis, may be beneficial for health and well-being.
This promising research has led to a surge in hemp cultivation and even the legalization of hemp farming in the United States, a move that is expected to provide a lifeline for many struggling farmers. Hemp cultivation is an increasingly large portion of the cannabis market, and one that the deal with TorusMed will help SinglePoint access.
Based on both this shift for hemp and wider trends, commentators are predicting even greater growth in 2019 and beyond; one report has calculated that the industry will be worth $146.4 billion by 2025. Even half that growth would provide a huge opportunity for companies such as SinglePoint, and if the industry actually reaches that figure, current players could be big winners.
Positioning for Advantage
It is in this context that SinglePoint, a company whose other work lies in the tech sector, has made the move to expand its position in cannabis. Through its SingleSeed subsidiary, SinglePoint has become a distributor of hemp-derived CBD products at a critical moment.
"It seems like two years ago I started to hear a little bit about CBD and what it was doing for people," said SinglePoint CEO Greg Lambrecht. "Momentum has really been building for CBD. People are using it for a variety of things. As CBD becomes legal, you're going to see this product sold in more traditional stores like Walgreens and 7-Eleven. We're really excited about our online presence, but we're also very focused on putting this product into retail too."
The cannabis market has already been seeing steady growth. The legalization of hemp is likely to continue this promising trend. Companies such as SinglePoint that have raised funding and established a foothold in the hemp sector appear to be well positioned to take advantage of that change.
Lining Up for Growth
Of course, It's not just a matter of making mergers and acquisitions, it's making the right ones. Several other companies join SinglePoint in making those sound decisions. Among the companies making significant mergers and acquisitions in cannabis are holding companies such as PotNetwork Holdings Inc. (OTC:POTN). PotNetwork's subsidiaries cover various parts of the cannabis industry, including production, sales and support; its subsidiaries include Diamond CBD Inc., which produces a line of CBD-based oils, creams and edibles.
Like SinglePoint, KushCo Holdings Inc. (OTCQB:KSHB) has entered the cannabis sector from elsewhere through an interest in providing other services to cannabis companies. In KushCo's case, this was packaging solutions, the sort of unglamorous but important service that any industry needs. KushCo has since expanded its work in the sector, creating a one-stop shop for cannabis products. This approach paved the way for KushCo to secure new long-term supply arrangements with three large companies, agreements expected to be worth $75 million. Having already seen its quarterly revenues rise 186 percent on the same period last year, 2019 is off to a strong start for KushCo.
CV Sciences Inc. (OTCQB:CVSI) has a business rooted in the fundamentals of the cannabis market, with two distinct business segments: research and development, and consumer products. Following the recent founding of the U.S. Hemp Authority certification program, CV Sciences has become one of the country's first certified hemp manufacturers. This certification provides CV Science customers assurance about the quality and safety of the company's products, including verifying that its products are made entirely from hemp and not from other cannabis strains.
Green Organic Dutchman (OTC:TGODF) (TSX:TGOD) produces organic, sustainably grown cannabis, catering to the substantial part of the cannabis market concerned with the environment and ethical farming. The company is building two new growing facilities and has been looking for ways to improve its designs as it builds. Recent improvements will increase production capacity from 156,000kg of cannabis to 202,500kg.
While improvements in technology, techniques and certification are helping companies tap into the growing cannabis sector, mergers and acquisitions are also allowing companies to access all of these while increasing their market share. Those who make the right moves now could benefit from dramatic growth over the next few years.
For more information about Singlepoint, please visit SinglePoint Inc. (OTCQB:SING).
About CannabisNewsWire
CannabisNewsWire (CNW) is an information service that provides (1) access to our news aggregation and syndication servers, (2) CannabisNewsBreaks that summarize corporate news and information, (3) enhanced press release services, (4) social media distribution and optimization services, and (5) a full array of corporate communication solutions. As a multifaceted financial news and content distribution company with an extensive team of contributing journalists and writers, CNW is uniquely positioned to best serve private and public companies that desire to reach a wide audience of investors, consumers, journalists and the general public. CNW has an ever-growing distribution network of more than 5,000 key syndication outlets across the country. By cutting through the overload of information in today's market, CNW brings its clients unparalleled visibility, recognition and brand awareness. CNW is where news, content and information converge.
Receive Text Alerts from CannabisNewsWire: Text "Cannabis" to 21000
For more information please visit https://www.CannabisNewsWire.com and or https://CannabisNewsWire.News
Please see full terms of use and disclaimers on the CannabisNewsWire website applicable to all content provided by CNW, wherever published or re-published: http://CNW.fm/Disclaimer
DISCLAIMER: CannabisNewsWire (CNW) is the source of the Article and content set forth above. References to any issuer other than the profiled issuer are intended solely to identify industry participants and do not constitute an endorsement of any issuer and do not constitute a comparison to the profiled issuer. FN Media Group (FNM) is a third-party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated with CNW or any company mentioned herein. The commentary, views and opinions expressed in this release by CNW are solely those of CNW and are not shared by and do not reflect in any manner the views or opinions of FNM. Readers of this Article and content agree that they cannot and will not seek to hold liable CNW and FNM for any investment decisions by their readers or subscribers. CNW and FNM and their respective affiliated companies are a news dissemination and financial marketing solutions provider and are NOT registered broker-dealers/analysts/investment advisers, hold no investment licenses and may NOT sell, offer to sell or offer to buy any security.
The Article and content related to the profiled company represent the personal and subjective views of the Author, and are subject to change at any time without notice. The information provided in the Article and the content has been obtained from sources which the Author believes to be reliable. However, the Author has not independently verified or otherwise investigated all such information. None of the Author, CNW, FNM, or any of their respective affiliates, guarantee the accuracy or completeness of any such information. This Article and content are not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action; readers are strongly urged to speak with their own investment advisor and review all of the profiled issuer's filings made with the Securities and Exchange Commission before making any investment decisions and should understand the risks associated with an investment in the profiled issuer's securities, including, but not limited to, the complete loss of your investment.
CNW & FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may", "future", "plan" or "planned", "will" or "should", "expected," "anticipates", "draft", "eventually" or "projected". You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company's annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and CNW and FNM undertake no obligation to update such statements.
CannabisNewsWire (CNW) & NetworkNewsWire (NNW) are proud to be affiliated partners of the Investor Brand Network (IBN)
About IBN
Over the past 10+ years we have consistently introduced new network brands, each specifically designed to fulfil the unique needs of our growing client base and services. Today, we continue to expand our branded network of highly influential properties, leveraging the knowledge and energy of specialized teams of experts to serve our increasingly diversified list of clients.
Please feel free to visit the Investor Brand Network (IBN) http://www.InvestorBrandNetwork.com
Corporate Communications Contact:
CannabisNewsWire (CNW)
Denver, Colorado
www.CannabisNewsWire.com
+1-303-498-7722 Office
Editor@CannabisNewsWire.net
Media Contact:
FN Media Group, LLC
NNW@FinancialNewsMedia.com
+1-(954)345-0611
Share this article