Brands and Profit Margins Driving M&A
In 2021, a record-breaking flurry of merger-and-acquisition (M&A) deals reshaped the cannabis industry. While the pace of M&A activity in 2022 seems unlikely to exceed last year’s in terms of sheer numbers, there is a good chance we will see a perpetuated trend of consolidation deals as market economics continue to mature. What’s new for 2022 is how the drivers behind M&A activity continue to evolve with the industry. As cannabis further entrenches into established markets and spreads to newly legalized states, the battle for brand dominance is heating up. Multistate operators (MSOs) are competing with local operations for both shelf space and the hearts of patients and consumers. At the same time, the lack of regulatory progress at the federal level and general market disruptions like wholesale flower price fluctuations mean turning a profit in cannabis hasn’t gotten any easier. As a result, operators of all sizes are seeking opportunities to boost operational and financ...