Two Canadian marijuana companies merged to create a $ 6 billion corporation. A buyer on the deal is Aurora Cannabis, which acquires CanniMed Therapeutics, a small cannabis producer, the BBC said.
Canada plans to legalize marijuana for entertainment purposes in the middle of this year. This is also the main reason why companies operating in this area are looking for ways to unite with the hope of gaining market share from the emerging market. The deal is the largest in the Canadian marijuana industry so far, creating the world’s largest Cannabis company. Aurora has paid about $ 850 million for the acquisition of CanniMed.
According to analysts, the purpose of this deal is to increase the penetration of medical products based on marijuana. Last year, Canadian Prime Minister Justin Trudeau pledged to “legalize regulated marijuana access to reduce access of young people to the illicit cannabis market.” The Canadian Parliamentary Budget Committee estimates that last year approximately 4.6 million people at the age of 15 and more have used cannabis at least once, meaning that 655 metric tons of cannabis will be used only this year.
Canada is among the few countries around the world to legalize marijuana for entertainment purposes. Among them are Uruguay, the Netherlands, and nine states in the United States, though federal levels are still considered illegal, and Gen. Prosecutor Jeff Sessions threatens to stop liberalization. Generally the marijuana industry is in a period of consolidation. According to a survey by EY consultants, 87% of executives expect mergers and acquisitions in the sector to expand markets.