If you need a quick round up article .. this is it.
We preume there’ll be another slew of announcements towards the end of the week
As our headline image suggests, the cannabis sector wasn’t the Holy Grail some were hoping for .. next stop cryptocurrency, the shrubbery business wasn’t for them!
Is the cannabis gold rush over? Moves by Curaleaf, Ayr, Akerna and other companies point to tough times.
Ayr scraps $55 million Chicago deal, Curaleaf cuts staff, Organigram receives delisting notice and Akerna moves out of the pot business altogether
Microcap software company Akerna Corp. had hopes for its role in the cannabis business, but things have gotten so bad that it’s moving into another troubled industry — cryptocurrencies, in one of many examples that point to tough times in the pot sector.
Separate announcements from Akerna KERN, -11.48% and several other cannabis names in recent days cited problems such as oversupply and competition in Canada as well as in parts of the U.S. market.
The cooler prospects for cannabis companies, along with the overall bear market that took hold in 2022, have caused merger-and-acquisition activity in the cannabis sector to drop by 73.6%, to $10.2 billion for the 12 months ending Jan. 27, according to estimates published Monday by Viridian Capital.
Analysts at Viridian said deals have dried up partly because of retrenchment and concentration on cash flow rather than growth. But demand for M&A may increase as record tightness in the cannabis capital markets, ongoing price compression and inflationary margin pressure push small and midsize companies into a liquidity crunch and drive increased distressed M&A opportunities, analysts said.
“The rugged operating and financing environment will be healthy for the industry, clearing away those unable to [respond] to the challenges and strengthening those that took the opportunity to improve their cash-generational capability,” Viridian analysts said in a research note. “It will present a once-in-a-lifetime opportunity for investors/companies/acquirers who can discern deep value and assemble distressed assets at deeply discounted prices.”
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