The struggling cannabis sector is likely to see a wave of large and mid-sized mergers in 2020 as growth capital goes up in smoke, stock prices decline and producers report lower-than-expected sales, industry executives say.

With the investor euphoria in 2018 and early 2019 for market share gains giving way to the hard realities of constructing profitable businesses, more companies will turn to mergers to conserve cash and survive, they say.

“We’ve had six months of zero wind in the sector,” said Bruce Linton, the former CEO of Smith Falls, Ontario-based Canopy Growth Corp. and leading industry figure. The market for new listings, an important indicator of investor interest, has been “crushed,” and many previously announced stock mergers in the sector are being renegotiated or terminated, he said.

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