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Mergers and Acquisitions in Cannabis Industry Picking Up Steam - Who's Next

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According to an article in the Marijuana Business daily, in the first week of August 2019 alone, there were eight acquisitions of private companies by public companies in the cannabis sector… and they see this as a trend that will continue into the end of this year and thereafter also. The article added: "While the number of merger and acquisition deals involving public companies as acquirers continues to outpace private ones, the percentage of overall M&A transactions involving public buyers is slightly lower in 2019 than year-to-date 2018, 71% versus 78%... (but) In total, 233 M&A transactions have been completed so far in 2019 versus 185 for a similar period last year."  The Green Entrepreneur said in an article published on its website that more mergers and acquisitions are coming to the cannabis markets, and they see that as a good thing. They said that: "As the industry accelerates its trend towards mergers and acquisitions, small companies have lots to gain… Despite being a relatively new industry, cannabis is quickly moving through the well-trodden industry life cycle: from fragmentation to consolidation in the form of mergers and acquisition. This is good news for small businesses and private investors. A company's long-term success directly correlates with how fast it can move up the consolidation curve. In a mature industry, two or three companies often make up 70 to 90 percent of the market. And market ownership isn't achieved always through slow, steady growth but rather through brand alliances and M&As." Active cannabis companies in the markets this week include:  Medicine Man Technologies, Inc.Tilray, Inc., Aurora Cannabis Inc., Curaleaf Holdings, Inc., Cronos Group Inc.

Medicine Man Technologies, Inc. (OTCQX: MDCL) BREAKING NEWS:  Medicine Man Technologies announced today that it has entered into a binding term sheet to acquire Canyon LLC ("Canyon"), a leading Colorado manufacturer of all-natural, discreet, and highly effective premium-infused edibles.

Under the terms of the transaction, Medicine Man Technologies will purchase Canyon LLC for $5.13 million, payable in cash and common stock of the Company that will be determined and set forth in the long form agreement among the parties.  The cash consideration, however, will not be greater than $2.565 million and the shares of common stock will be valued at $3.07 per share. Based upon the year-to-date results, Canyon is expected to generate gross revenues of $3.3 million in 2019.  The purchase price may be subject to adjustment, which will be detailed in the long form agreement entered into among the parties.

"Our latest series of announcements have been predicated on building out our footprint of retail dispensaries," said Andy Williams, Co-Founder and Chief Executive Officer of Medicine Man Technologies. "Canyon has been on our radar for several years given its strong following and high-quality manufacturing and extraction methods. Its proprietary process using CO2 to extract cannabis oil from plant materials yields flavorful products. From hard candies, capsules, and micro-dosed gummies to its cannabis-infused beverages, the unique products derived from its cannabis oil have gained a deserving reputation and garnered a tremendous customer base. We believe this acquisition is important in furthering the build-out of our infrastructure and diversifying our branded product offerings."

Other recent developments in the biotech industry include:

Tilray, Inc.  recently announced that it has signed a definitive merger agreement with its largest stockholder Privateer Holdings, Inc. ("Privateer") for a transaction that will extend the lock-up on and provide for the issuance of up to 75 million Tilray shares to Privateer's equity holders (and the cancellation of the 75 million shares currently owned by Privateer). These shares currently represent 77 percent of Tilray's total shares outstanding. Tilray and Privateer previously announced the signing of a non-binding Letter of Intent for this transaction on June 10, 2019.

Under the terms of the definitive agreement, the parties will affect a downstream merger of Privateer with and into a wholly-owned subsidiary of Tilray, with the Tilray subsidiary surviving the merger, and the issuance by Tilray to Privateer equity holders of newly issued and registered shares of Tilray common stock and options to purchase shares of Tilray common stock in an aggregate amount equal to the number of Tilray common shares currently held by Privateer. As set forth in the definitive agreement, at its sole election (to be made prior to closing), Tilray may pay a portion of the merger consideration in cash in lieu of issuing an equivalent number of shares of Tilray. All Tilray shares held by Privateer and all outstanding Privateer stock will be cancelled upon consummation of the merger.

Aurora Cannabis Inc. has released its financial and operational results for the fourth quarter and fiscal year ended June 30, 2019.  "In 2019 Aurora took its place as the global leader in cannabis production, research, innovation, and international market development. We are executing on all our strategic priorities," said Terry Booth, CEO. "Our best in class cultivation methods allow us to grow consistent, high-quality cannabis at scale. Because of this, we've delivered solid revenue growth in the fourth quarter. We are working to extend our reach in the U.S. markets. Our partnership with the UFC is a basis to explore CBD-from-hemp and hemp food products. We are also exploring additional opportunities and leveraging our Strategic Advisor. We are focused on building a sustainable, high-margin business while providing patients and consumers with access to safe and reliable medicine."

Glen Ibbott, CFO, added, "We continue to see strong growth in cannabis revenues in both medical and consumer categories. Our cultivation execution continues to drive production costs lower and improve gross margins. Aurora's diversified product portfolio remains in demand with patients and consumers alike. With the Canadian launch of derivative products in the coming months, we have made the necessary investments to ensure readiness and focus on a variety of value added products. We are very excited to supply an expanded consumer market with premium cannabis and new product forms."

Curaleaf Holdings, Inc. a leading vertically integrated cannabis operator in the United States, recently announced the opening of its 26th Florida dispensary at 1994 Kings Highway in Port Charlotte. Curaleaf has the largest cannabis dispensary footprint in the US with 49 dispensaries across the country, and continues to execute on its strategy of rapid expansion in Florida.

Curaleaf's Port Charlotte medical cannabis center will celebrate its grand opening with an event in partnership with the Charlotte County Chamber of Commerce on Thursday, September 12, 2019.  The 3,600 square foot location is easily accessible off I-75 to serve patients in Port Charlotte, Charlotte Harbor, Punta Gorda, Solana, Harbour Heights and Lake Suzi. "It's part of our continuing effort to expand our footprint in Florida to provide patients with access to Curaleaf's premium medical cannabis products and educational resources," said Joe Lusardi, Curaleaf CEO.

Cronos Group Inc. has closed its previously announced acquisition of four Redwood Holding Group LLC operating subsidiaries. The transaction provides Cronos Group with a leading U.S. hemp-based products platform, including hemp-derived cannabidiol-infused skin-care and other consumer products that are sold online and through retail and hospitality partner channels in the United States under the brand Lord Jones.

Mike Gorenstein, Cronos Group's chairman, president and chief executive officer, said: "This acquisition is one of a number of new growth opportunities that is differentiating our company and our strategic direction. We are pleased to have completed this acquisition and look forward to working closely with Rob and Cindy to further build on their record of innovation and fully capitalize on the platform they have created."

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