The cannabis industry is facing a period of significant change, with a tightening market presenting both challenges and opportunities for companies seeking growth. At the recent Benzinga Cannabis Capital Conference, Tony Schor, CEO of Investor Awareness, offered a candid look into the current landscape, particularly in the realm of mergers and acquisitions (M&A). Schor, a veteran of the cannabis industry, highlighted the evolving strategies companies are employing to navigate financial hurdles and secure capital.
One of the key takeaways from Schor’s presentation was the shift in focus towards revenue-producing companies in the M&A space. “People are looking for revenue-producing, not necessarily distressed, but revenue-generating cannabis companies,” he said. This shift signals a new era of strategic acquisitions, where investors are seeking to acquire companies with strong revenue streams and potential for future growth.
Schor also emphasized the changing dynamics of M&A activity. “It’s not necessarily the large MSOs doing the transactions, but new independents and cannabis operators who have left and now are coming back to the space,” he observed. This trend reflects the increasing diversity of players in the cannabis M&A landscape, with smaller, independent companies and returning entrepreneurs joining the fray.
A recurring theme throughout Schor’s discussion was the difficulty companies face in securing capital, regardless of their size or market position. “Cash capital is tough to find,” he stressed. Public companies are facing limited growth opportunities in the current market environment, while private companies struggle to attract institutional investment. “Private companies are finding money, but their end game is to go public,” Schor added, underscoring the long-term goals driving many cannabis businesses.
However, the lack of access to federal banking remains a significant obstacle, hindering growth potential for the industry. “Without federal banking reforms, institutional support remains out of reach,” Schor said. This lack of access to traditional financial services creates a barrier for cannabis businesses seeking to expand their operations and scale their ventures.
Schor concluded by advocating for strategic partnerships as a key strategy for cannabis businesses seeking to overcome capital constraints and achieve growth. “The only way this industry survives is if you talk to a new person and discuss potential collaborations and partnerships,” he said. Partnerships can provide a lifeline for companies looking to expand into new markets without significant capital investment.
“Perhaps you’re a brand in Colorado and want to go to other markets, but you don’t have the capital. Find another brand or a manufacturing partner in another market,” Schor advised. By forming strategic partnerships, cannabis companies can leverage complementary strengths, share resources, and access new markets without taking on significant financial risk.
Schor’s insights at the Benzinga Cannabis Capital Conference provide a roadmap for cannabis companies grappling with financial hurdles and seeking ways to thrive in a dynamic and competitive market. By focusing on revenue-generating acquisitions, embracing creative capital solutions, and leveraging strategic partnerships, cannabis businesses can position themselves for success in the years to come.