Editorial Coverage: Several years of impressive growth are
expected to continue in the cannabis sector in 2019, and companies
are making the most of it through mergers and acquisitions.
- The cannabis industry has seen growth in acquisitions over the
past two years.
- A large part of this comes from the emergence of the hemp/CBD
- Industry commentators expect these trends to continue.
SinglePoint Inc. (OTCQB: SING) (SING
Profile) is tapping into this exciting potential
through a strategy of well-financed acquisitions and investment in
other cannabis companies. PotNetwork Holdings Inc. (OTC:
POTN) has built up a series of subsidiaries and is now
reaching out to mainstream markets with its products.
KushCo Holdings Inc. (OTCQB: KSHB) has recently
established new supply arrangements that will increase its already
growing profits. Following the legalization of hemp farming,
CV Sciences Inc. (OTCQB: CVSI) has become one of
the United States’ first certified hemp producers. And The
Green Organic Dutchman (OTCQX: TGODF) (TSX: TGOD) (TGOD
Profile) is building improved cultivation facilities
to meet the demand of cannabis’s growing customer base.
To view an infographic of this editorial, click here.
The Cannabis Merger Boom
Over the past year, the cannabis industry has seen a significant
new trend emerge. So far, the industry has mostly been made up of
small businesses, but a series of mergers and acquisitions have
started to change the layout of the land. The larger, more
confident cannabis businesses have started to absorb their smaller
competitors, creating businesses with greater efficiency, vertical
integration and increased market shares.
This boom in cannabis mergers and acquisitions extends beyond
committed cannabis companies. Top-tier businesses have started
paying attention to the sector, buying substantial holdings in
cannabis companies. Cannabis companies themselves have encouraged
this interest, seeking outside help to fuel their growth.
The Merger Market
For companies building a strategy around cannabis acquisitions,
such as SinglePoint Inc.
(OTCQB: SING), current trends are legitimizing what they
already held to be true — that there’s great potential in building
larger, more diverse cannabis companies through mergers and
The numbers are clear. Eighty-six cannabis
companies in the United States were targeted for mergers and
acquisitions in 2017, and that number rose to 140 in 2018. That’s a
significant increase two years in a row for an industry that’s
previously been driven by small start-ups, and commentators expect the trend to continue. In Canada,
recreational legalization has triggered an intensive period of
ambitious growth. In the United States, the illegality of
transporting cannabis across state lines has discouraged expansion
beyond the state level, but companies are starting to overcome that
barrier, finding ways to run nationwide businesses in a
For SinglePoint, this means making moves such as the company’s
investment in TorusMed, an organization working on finding new
ways to grow industrial hemp. Hemp is an important subset of the
cannabis industry — and one that looks set to expand, thanks to
federal legalization of the crop under the 2018 Farm Bill.
The bill allows cultivators to grow hemp for cannabidiol (CBD),
an increasingly popular component, without the restrictions placed
on other forms of cannabis. SinglePoint’s work with TorusMed is
aimed at producing more consistent crops of high-CBD hemp with
lower costs because of TorusMed’s greater efficiency. The
investment appears to provide an effective way for SinglePoint to
gain an advantage in the cannabis sector across the United States
SinglePoint’s investment in TorusMed isn’t an isolated example.
SinglePoint has built a solid strategy around acquisitions and
investment. SinglePoint President Wil Ralston appeared on MoneyTV to discuss the company’s financing
options for acquisitions, and in November, SinglePoint announced that it had raised $5 million in fresh
funding from its own investors for the explicit purpose of fueling
this approach. Thanks to the confidence of the market in the future
of cannabis, SinglePoint has had no trouble raising funds or
gaining attention for its work.
A Growing Industry
One of the reasons SinglePoint has seen such success in finding
funding is the wider growth of the cannabis sector.
In the United States, where SinglePoint is based, cannabis
legalization has steadily been spreading on a state level.
Thirty-three states have now made the drug legal for medical
purposes, while 10 have made recreational cannabis legal. North of
the border, Canada has become the first G8 country to legalize
cannabis nationally, not only setting an international precedent
but also generating interest from American companies. The spread of
public health solutions to cannabis use over prohibitory ones has
become an international trend, creating a global cannabis
Over the past five years, this trend has led in a surprising
direction: hemp and CBD. Hemp is a form of cannabis that doesn’t
contain THC, the chemical that produces a high in users. Related to
that trend, researchers have found growing evidence that CBD, a
nonpsychoactive ingredient found in all strains of cannabis, may be
beneficial for health and well-being.
This promising research has led to a surge in hemp cultivation
and even the legalization of hemp farming in the United States, a
move that is expected to provide a lifeline for many struggling
farmers. Hemp cultivation is an increasingly large portion of the
cannabis market, and one that the deal with TorusMed will help
Based on both this shift for hemp and wider trends, commentators are predicting even greater growth in 2019
and beyond; one report has calculated that the industry will be
worth $146.4 billion by 2025. Even half that
growth would provide a huge opportunity for companies such as
SinglePoint, and if the industry actually reaches that figure,
current players could be big winners.
Positioning for Advantage
It is in this context that SinglePoint, a company whose other
work lies in the tech sector, has made the move to expand its
position in cannabis. Through its SingleSeed subsidiary,
SinglePoint has become a distributor of hemp-derived CBD products
at a critical moment.
“It seems like two years ago I started to hear a little bit
about CBD and what it was doing for people,” said SinglePoint CEO
Greg Lambrecht. “Momentum has really been building for CBD. People
are using it for a variety of things. As CBD becomes legal, you’re
going to see this product sold in more traditional stores like
Walgreens and 7-Eleven. We’re really excited about our online
presence, but we’re also very focused on putting this product into
The cannabis market has already been seeing steady growth. The
legalization of hemp is likely to continue this promising trend.
Companies such as SinglePoint that have raised funding and
established a foothold in the hemp sector appear to be well
positioned to take advantage of that change.
Lining Up for Growth
Of course, It’s not just a matter of making mergers and
acquisitions, it’s making the right ones. Several other companies
join SinglePoint in making those sound decisions. Among the
companies making significant mergers and acquisitions in cannabis
are holding companies such as PotNetwork Holdings Inc.
(OTC: POTN). PotNetwork’s subsidiaries cover various parts
of the cannabis industry, including production, sales and support;
its subsidiaries include Diamond CBD Inc., which produces a line of
CBD-based oils, creams and edibles.
Like SinglePoint, KushCo Holdings Inc. (OTCQB:
KSHB) has entered the cannabis sector from elsewhere
through an interest in providing other services to cannabis
companies. In KushCo’s case, this was packaging solutions, the sort
of unglamorous but important service that any industry needs.
KushCo has since expanded its work in the sector, creating a
one-stop shop for cannabis products. This approach paved the way
for KushCo to secure new long-term
supply arrangements with three large companies, agreements
expected to be worth $75 million. Having already seen its quarterly
revenues rise 186 percent on the same period last year, 2019 is off
to a strong start for KushCo.
CV Sciences Inc. (OTCQB: CVSI) has a business
rooted in the fundamentals of the cannabis market, with two
distinct business segments: research and development, and consumer
products. Following the recent founding of the U.S. Hemp Authority
certification program, CV Sciences has become one of the country’s first certified hemp
manufacturers. This certification provides CV Science customers
assurance about the quality and safety of the company’s products,
including verifying that its products are made entirely from hemp
and not from other cannabis strains.
The Green Organic Dutchman (OTCQX: TGODF) (TSX:
TGOD) produces organic, sustainably grown cannabis,
catering to the substantial part of the cannabis market concerned
with the environment and ethical farming. The company is building
two new growing facilities and has been looking for ways to improve
its designs as it builds. Recent improvements will increase
production capacity from 156,000kg of cannabis to 202,500kg.
While improvements in technology, techniques and certification
are helping companies tap into the growing cannabis sector, mergers
and acquisitions are also allowing companies to access all of these
while increasing their market share. Those who make the right moves
now could benefit from dramatic growth over the next few years.
For more information on SinglePoint, visit SinglePoint Inc.
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