What happened
Friday was a good day for cannabis investors. Here's how some of the most popular pot stocks fared:
- Sundial Growers (SNDL 0.97%), up 15%
- Cronos Group (CRON 1.72%), up 15%
- OrganiGram Holdings (OGI +5.04%), up 11%
- Aurora Cannabis (ACB 4.11%), up 8%
- Canopy Growth (CGC 3.24%), up 6%
So what
A wave of deal-making has swept over the cannabis sector in recent months. Industry leaders Tilray and Aphria completed their merger earlier this month. Sundial Growers recently snapped up cannabis retailer Inner Spirit Holdings. Canopy Growth reached a deal to acquire The Supreme Cannabis Company in April. And today, investors awoke to the news that HEXO struck a deal to purchase privately held marijuana producer Redecan for roughly $766 million.
Image source: Getty Images.
The industry is rapidly consolidating, and investors appear to be betting that the businesses that remain will have a better chance at generating sustainable profits.
Now what
Canopy, Cronos, and Sundial have cash-rich balance sheets and thus could choose to make additional acquisitions in the coming months. Aurora and OrganiGram have less cash and are therefore more likely to be courted by larger suitors. Yet all of these companies' investors should expect continued deal-making to reshape the marijuana industry in the years ahead.
