EXCLUSIVE: The Cannabis Industry Is Ripe For M&A: Top Industry Execs Talk Opportunity Ahead

Merger and acquisition activity in the cannabis space has accelerated in 2022 and looks poised to continue to pick up with markets trending lower on continued inflation concerns.

Several cannabis executives discussed potential opportunities Tuesday at Benzinga's Cannabis Capital Conference in Chicago.

"There's a lot of excitement right now in Europe because of this potential for Germany to legalize adult-use cannabis," Akanda Corp AKAN CEO Tej Verk said. 

The European Market: Europe is primarily a medical cannabis market and Germany is the leader in imports with 25 tonnes per annum, he said. 

"This could skyrocket to anywhere between 300 to 500 tonnes of demand," Verk said. 

The problem is that there aren't a lot of M&A opportunities in Europe, he added.

Lyphe Group co-founder and CEO Jonathan Nadler jumped into the discussion, noting that all of the top medical cannabis companies in Europe are only earning between $10 million and $15 million per year. 

"So what an opportunity to come in, especially with a weak pound," Nadler said. 

He noted that Curaleaf Hldgs Inc CURLF is the only company that has attempted to take control of the opportunity. 

"They just spotted opportunities to gobble up market share in markets that are valuable to them — U.K. and Germany — and unless someone else is coming, they're just going to rule the roost," Nadler said. 

M&A Approach: There are M&A opportunities that would allow cannabis companies to more easily export flower around the globe and participate in the potential boom in Germany.

Companies that are considering M&A right now have strategic purposes driving those efforts. Some companies aim to de-risk their company profile, while others look to gain consumers or access to distribution, Flora Growth Corp FLGC CEO and president Luis Merchan said.

"There are a lot of adjacent businesses that would complement the infrastructure of a company such as Flora," he said.

Consumer product brands, distribution companies and supply chain companies that have the ability to move flower from one point on the globe to the other could all complement cannabis businesses, he explained. 

"Those, at this point, could be great acquisition targets for of course Flora and other companies in this industry," Merchan said.

The U.S. & Canadian Markets: Canadian cannabis company SNDL Inc SNDL could be one of the companies looking to expand its reach. 

"Generally speaking, the Canadian market is still massively oversupplied," SNDL CEO Zach George said. 

Product availability is generally not the issue, he added. 

"But you have this real sea of sameness out there in terms of product assortment and that's driving the commoditization of branded product at retail, which is a problem," George said. 

He suggested that U.S. operators can learn from the mistakes many Canadian cannabis companies have made along the way. 

"Most states and markets in the U.S. are going to experience their own Canadian moment," George said. 

Check out more from Benzinga's Cannabis Capital Conference below: 

Photo: Carlos Alvarez.