IAnthus, a publicly-traded firm that operates cannabis retail facilities in the US and Canada, acquired MPX Bioceutical, a Toronto-based cannabis company, in a $640 million stock transaction.
It's the first public-to-public acquisition in US cannabis history, according to a press release. The mega-acquisition comes on the heels of MedMen's $682 million acquisition of PharmaCann.
iAnthus and MedMen are two of the biggest retail players in the industry — and these back-to-back acquisitions are no coincidence. Cannabis companies have been on a dealmaking tear in recent weeks as retailers in the sector race to carve out their share of the market as more US states weigh legalization following Canada's move to legalize marijuana nationwide.
"There are three key factors to this," iAnthus CEO Hadley Ford said in an interview with Business Insider. "The first is expanding our footprint, the second is national scale, and the third piece is great people."
The acquisition nearly doubles the firm's US footprint and gives iAnthus access to licenses in 10 US states — including valuable East Coast markets like New York, Florida, and Massachusetts — permitting iAnthus to operate 56 retail locations and 14 cultivation facilities.
MedMen, in comparison, has a combined portfolio of 79 cannabis licenses across 12 states, including 66 retail stores and 13 cultivation licenses, following the retailer's PharmaCann acquisition.
"MedMen's done a good job," Ford said. "We're more like frenemies than enemies. We'll be good competitors — the sector is so nascent."
Ford added that the recent mergers-and-acquisitions spree in the cannabis sector will probably leave only eight to 10 companies standing when things shake out.
"The nascent U.S. cannabis market is still in a land-grab phase, and we feel that our footprint when combined with iAnthus, provides our investors with the strongest possible exposure to this explosive marketplace," Scott Boyes, Chief Executive Officer of MPX, said in the press release.
As part of the merger, iAnthus will develop new brand names for its stores and products.
Ford, a Goldman Sachs veteran and former healthcare entrepreneur, said cannabis is a "strange business" because it's considered an illegal, Schedule I drug by the federal government even though it's legal in some form in 30 states and Canada.
The US federal government doesn't allow cannabis to be shipped across state lines, so iAnthus is forced to set up individual supply and processing chains in each state.
"You have to make sure you can replicate your product," Ford said.
"It's not like making Cheerios in Oklahoma and then shipping them across the border," he said. "The product has to look the same, taste the same, and be consistent everywhere we operate. Everything has to be identical."
Ford said he looks for states like New York — which allows medical marijuana under a restrictive regime — that limit the number of dispensary licenses they hand out. That limits competition and helps iAnthus dominate the market.
He said his experience in building out and operating cancer treatment centers as the former CEO of ProCure Treatment Centers is what sets his management team apart.
Ford hopes to scale iAnthus quickly — he wants to add between 600 and 800 people over the next 12 months — and says hiring will be one of his firm's biggest challenges in the months ahead.
"The thing that keeps me up most at night, besides putting this deal together, is finding good, professional, and serious people," he said.
A year ago, Ford said, he couldn't get mid-level or senior execs at big companies to take a serious look the cannabis industry.
"Now you can," Ford said. "I'm not sure it makes it easier to bring them aboard, but once you start having discussions, you have better end results."
Overall, Ford said he's "very excited to get up every day and make our shareholder’s rich."
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