The Cannabis industry has experienced remarkable growth in its market size in the past several years. As an industry of interest from both a legal and business opportunity perspective, many onlookers are drawn to the burgeoning possibilities. The size of the market has grown exponentially recently as a result of softening regulatory acts from individual U.S. states, primarily as research continues around the potential medical benefits. Starting with the legalization of medicinal marijuana in California in 1996, an increasing number of states have approved it for both medicinal and recreational use. As a result of these legal changes, the industry is a prime focus for M&A transactions and investments even while it retains its classification as a Schedule 1 drug/substance.
As part of the M&A webinar series hosted by S&P Global Market Intelligence, on September 19th a panel of experts provided context surrounding the cannabis industry from a market share, legal, healthcare, and M&A perspective. According to the 2019 Marijuana Business Factbook, the combined recreational and medicinal sales of Cannabis reached $8.6-10.0 million total in 2018. This figure is projected to increase substantially in the next 5 years to an estimated total of $25-30.
The growth of the industry can be largely credited to the growing total addressable market of potential customers. This may be a reason for higher M&A deal premiums in this industry, especially in relation to other sub-sectors within the Consumer sector. Interestingly, the higher premiums are not deterring activity within this space. The activity has risen in spite of these premiums, as the cannabis sub-sector has grown substantially from 2017 to 2018.
Tags : Cannabis, Budding Industry, M&A transactions, Cannabis industry,