Cannabis legalisation progresses in the United States
USA | Gone are the days when the founder of Denver’s Wyncoop Brewery, John Hickenlooper, now a Senator in Washington, could quip: “My competition is television.” Nowadays a brewer’s list of competitors is far longer and will likely include legal recreational cannabis.
Of course, in Wyncoop’s early days, in the 1980s, plenty of people would have inhaled the stuff, only illegally so.
Since then, the number of US states that permit cannabis use in some form has increased to 35, after voters in several states approved cannabis legalisation initiatives on their ballots in the recent US presidential election.
With this, the recreational use of cannabis is now legal in 15 states across the US plus the District of Columbia, aka Washington, while medical use is now allowed in nearly three dozen states.
Cannabis and the pandemic
Although many companies in the emerging cannabis industry are still posting losses as they invest heavily, many have been able to maintain revenue growth in spite of the covid-19 pandemic.
You could even say that they have continued growing because of the pandemic. Pot-smoking has always been something of a furtive activity and that may make it more suited to social distancing – a practice which is here to stay even when the pandemic abates.
The evidence suggests that the pandemic has proven a boon for legal pot shops, as customers fear the risks associated with inhaling questionable products and are nervous about letting shady sellers into their homes.
Also, pandemic-frazzled Americans may simply get stoned more often.
The boom in legal sales (revenue hit nearly USD 17 billion in 2020, a 25 percent spike over 2019) was driven in large part by new legal markets, particularly the start of recreational sales in the states of Illinois and Michigan. But even states with relatively mature markets saw big spikes in sales. In Oregon, for example, monthly revenues jumped from just below USD 70 million during the first two months of 2020 to more than USD 100 million in May and June, it was reported.
Cannabis heavyweights merge
The merger between Canadian firms Aphria and Tilray (TLRY) was announced on 16 December 2020. It will create the largest global cannabis company, with a pro forma revenue of USD 685 million.
According to the deal, which was structured as a reverse takeover of Aphria by Tilray, Aphria shareholders will end up owning about 60 percent of the combined company. Following the completion of the merger, the combined company will operate under the Tilray corporate name. It will have principal offices in the United States (New York and Seattle), Canada (Toronto, Leamington and Vancouver Island), Portugal and Germany.
In the US, the combined company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater Brewing Company, a cannabis lifestyle branded craft brewer from Atlanta, Georgia, which was acquired by Aphria for USD 300 million in November 2020, and Manitoba Harvest, a leading hemp food manufacturer and a pioneer in branded CBD and wellness products.
