Original cannabis journalism for Canadians

Welcome to the supermajors

Neil Closner, CEO of MedReleaf, poses among cannabis plants at his company's farm in Markham, Ont. (Nathan Denette / The Canadian Press)

When it comes to cannabis, a great deal of Canadian media coverage is focused less on the plant itself and more on the companies that grow it — what they're worth, who's listing on the stock markets, who's acquiring who, and so on.

Here at The Leaf News, we've made a conscious decision to centre our reporting on cannabis-related issues that matter to everyone, not just investors.

But a recent report by Beacon Securities stock analyst Vahan Ajamian caught our eye.

In a note last week to clients titled "The Potential Rise Of A 'Cannabis Supermajor'," Ajamian offered his thoughts on the latest rumoured deal in the cannabis sector, a potential merger between the licensed producer MedReleaf and one of its big rivals. ("Supermajor" is usually used to describe giant, transnational oil companies.)

That kind of deal would mark a dramatic change in the kinds of mergers and acquisitions that have defined Canada's cannabis industry so far, said Ajamian in an interview.

Until now, "it's been either somebody large buying somebody small, or two smaller players combining to make a mid-tier firm," he said.

"This would be the first time, at least in the recent iteration, that two of the larger players combine and you see consolidation within the big five (cannabis firms)."

What does this mean for cannabis consumers?

If MedReleaf does merge with a big rival to form Canada's first "cannabis supermajor," investors would have their fun. But what would it matter to Joe Canadian, shopping at the cannabis store after legalization?

Consumers could eventually see the impact of corporate cannabis consolidation at the cash register, said Ajamian.

"We always thought that it would be, eventually, like the beer market… You end up getting a few (companies) that get national distribution, national name recognition," he said.

"And then there's potential to better control your costs, and pass those savings onto the end consumer as you consolidate."

Critics of cannabis legalization like to say "Big Cannabis" will be the next Big Tobacco or Big Alcohol, and Ajamian points out the alcohol industry is already treating Canadian cannabis legalization as a business opportunity.

"It's not going to be left to the mom and pop industry," he said. "If this is a real, large global industry, you're going to have real, large global players."

Of course, international drug prohibition might slow that process down somewhat, Ajamian added.

"But that's the way most industries go."


New on The Leaf

  • No dilly-dallying: Prime Minister Trudeau committed to legalizing cannabis "this summer on schedule," clarifying earlier comments that augured a delay.
  • What's in your weed: How do you test the potency of your home-grown cannabis? As always, Herb's got the answer — plus a look at the law around sharing cannabis after legalization.
  • Cannabis college: Olds College in Alberta is the latest Canadian school to offer instruction in marijuana cultivation.

Elsewhere on the Weed Wide Web

  • Local regulation: The Mohawk Council of Kahnawake is writing its own cannabis laws ahead of legalization, and wants to limit cannabis use to those 21 and older. "It's just in line with what we believe is right within our community," band council chief Gina Deer told CBC Radio.
  • Herb for her: Fleurish Cannabis plans to cater exclusively to a female clientele with a focus on women's health and wellness, the company's CEO told a Calgary radio station.
  • Bud vs. booze: Legal weed is a threat to Big Alcohol, writes Globe and Mail business columnist Michael Babad.

What Next

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