'There’s no stopping the industry now’: Democratic control is a big win for marijuana
The industry is poised for a big shakeup even though the prospects for passing major changes to federal policy remain slim.
Curaleaf, America’s largest cannabis company, put over 16 million shares on the market overnight and brought in $300 million — in equity and debt sales — in under 24 hours. |
The day after Democrats swept both Senate seats in the Georgia runoff election — giving them a slim majority and installing pro-marijuana legalization leaders in the upper chamber — Curaleaf Chair Boris Jordan decided to try something big.
“I literally called my bankers and I said, ‘Guys, I think this is going to be a big change. Let's do an [overnight] offering,’” Jordan recalled.
Curaleaf, America’s largest cannabis company, put over 16 million shares on the market overnight and brought in $300 million — in equity and debt sales — in under 24 hours.
The company’s payday foreshadows how the entire cannabis industry is poised for growth and consolidation as Democrats take full control of the federal government. Companies are positioning themselves for the greater likelihood that federal cannabis restrictions will be loosened significantly.
Sales are already booming. Cannabis sales hit $20 billion last year — a 50 percent jump over 2019. Legalization continues to spread across the country, with more than one-third of Americans now living in states where marijuana is fully legal.
“There's no stopping the industry now,” said Andrew Kline, who recently joined the law firm Perkins Coie after serving as public policy director for the National Cannabis Industry Association. “The bigger players are going to be interested in acquiring smaller companies and becoming multi-state operators or expanding their footprint in different states.”
What’s happened so far? A flurry of deals and capital raises have been made in recent weeks, in addition to Curaleaf cashing in.
Cannabis behemoth Cresco Labs recently bought Bluma Wellness for $213 million, giving it a beachhead in the booming Florida market. There are now more than 450,000 medical marijuana patients in Florida — a more than 50 percent increase in the last year — and 310 dispensaries across the state, nearly 100 more than at the start of 2020.
“I think you're gonna see a lot of [mergers and acquisitions] coming,” said Bluma Wellness CEO Brady Cobb, who will join Cresco immediately and focus on building its Florida business. “It's going to be driven by the fact that institutional capital sees light at the end of the tunnel for these companies.”
Cresco also recently announced it will raise $125 million from investors, citing plans to accelerate its growth. The company was already soaring ahead of the political shifts: It had third-quarter revenues of $153 million — more than four times as much as during the comparable period in 2019.