Tilray and Aphria's blockbuster merger

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Happy Friday readers,

Cannabis deal mania continued this week, led by the news that Tilray and Aphria are merging in a $4 billion deal.

I spoke to Aphria CEO Irwin Simon and Tilray CEO Brendan Kennedy after the announcement. They said that the merger clearly positions the "new" Tilray as the largest cannabis company by revenue (it just exceeds Curaleaf) and makes it an attractive target for a strategic partner — perhaps a large consumer, pharma, or tobacco company — as well as a target for large institutional investors who have mostly sat on the sidelines of the cannabis industry so far.

You can read that story here. 

As the capital markets start returning their attention to cannabis, investors, lawyers, and executives I've been speaking with this week say they expect M&A to ramp up in a big way after the blockbuster merger. If you have a tip, please get in touch.

It's also worth your time to read our story from a few weeks ago where we talked to experts who predicted M&A would be on the rise after legalization swept five states and passed the US House. 

We'll also have a few more stories next week on ranking the top investors and startups in the cannabis industry, so keep an eye out for those. 

As an aside, this is the last edition of Insider Cannabis you'll be getting from us this year. On December 31, we'll be back in your inboxes for a special end-of-the-year roundup of our favorite stories from this year, but we'll be taking a break between now and then. 

Starting January 8, we'll be back in your inbox every Friday for your usual recap of cannabis news. 

Hope you all stay safe and get some much-needed rest over the break! 

-Jeremy (@jfberke) and Yeji (@jesse_yeji)

Here's what we wrote about this week:

A top Wall Street analyst lays out why Green Thumb Industries is the best marijuana stock to buy now, and says it could soar 38%

Cowen analyst Vivien Azer said Green Thumb Industries (GTI) is the best-positioned out of all of the cannabis stocks to capitalize on the momentum behind legalization in 2021. Azer wrote in a Monday note that of all the Canadian and US cannabis companies, GTI is best positioned to capitalize on the industry's growth prospects for next year and decade.

Here are the top 17 investment firms making deals in the booming cannabis industry, and where they're looking to place their next bets in 2021

We identified the top investment firms in the US cannabis industry, based on how much they've invested in cannabis startups in 2020. In total, we contacted 25 funds to ask how much they invested in cannabis startups in 2020. Based on their answers, we narrowed down our list to 17 top players and asked them to confirm how much they invested, how many deals they did, and what trends they're watching to place their next bets in 2021.

This is the third edition of our list of the top investment firms in cannabis. You can read the lists for 2018 and 2019 here.

Tilray and Aphria are merging in a $4 billion deal, the largest in cannabis history. The CEOs explain why the new Tilray is a prime target for a strategic partner.

Canadian cannabis producers Tilray and Aphria are merging in a deal that would give the combined company a market cap of $4 billion and make it the largest cannabis company by revenue. In a joint interview with BI on Wednesday morning, Aphria CEO Irwin Simon and Tilray CEO Brendan Kennedy discussed with Business Insider why the merger sets the combined company up for a major strategic partner.

See the pitch deck a psychedelics startup just used to raise $18.6 million to develop new treatments derived from the Sonoran Desert toad

UK-based psychedelics company Beckley Psytech closed an $18.6 million funding round, backed by investment firms Noetic Psychedelic Fund and Bail Capital. Born from the Beckley Foundation, a non-profit focused on drug policy reform and scientific research into psychoactive substances, Beckley Psytech is looking into the synthetic compound 5-MeO-DMT, a psychedelic agent found naturally in the Sonoran Desert toad, among other compounds. 

Take a look at the pitch deck the company used to raise their latest round of funding from investment firms Noetic Psychedelic Fund and Bail Capital.

From LeafLink to Greenbits, meet the 8 buzzy cannabis startups that raised the most cash in 2020

We identified the cannabis startups that closed the biggest funding rounds this year. The eight companies on our list collectively raised more than $253 million in 2020.

They range from private multi-state operators like Ascend Wellness Holdings, which raised $68.2 million in August, to tech startups, like LeafLink, which closed a $40 million Series C in December. This year, cannabis startups accounted for a smaller portion of total investment into the cannabis industry compared to their public counterparts.

Executive Moves

  • Acreage Holdings announced today that Peter Caldini, former president of Pfizer's North American consumer healthcare division, will take over as CEO. 
  • MedMen announced on Wednesday that Tom Lynch, interim CEO, has been elected as chairman of its board.
  • Aurora Cannabis Chief Science Officer Jonathan Page said he would be leaving the company, though he'll stay on as an advisor. Aurora did not announce an immediate replacement. 

Deals, launches, and IPOs

  • Tilray and Aphria announced they were merging in a $4 billion deal this week, marking the merger in cannabis to date. Read Jeremy's interview with CEOs of both companies here.
  • Clever Leaves is merging with Schultze Special Purpose Acquisition Corp, a SPAC, in an approximately $205 million deal. Clever Leaves will begin trading on the Nasdaq today. 
  • Ascend Wellness Holdings announced it would acquire Chicago Alternative Health Center as well as the right to open a second dispensary location. 
  • Aurora Cannabis announced a slew of changes, hoping to right-size its Canadian business. The announcement comes on the heels of multiple facilities closures and over 200 job cuts reported by Marijuana Business Daily. 
  • Chicago based cannabis company Verano announced on Tuesday it will go public on the CSE through a reverse takeover.
  • Michigan company Gage Cannabis raised $20 million from JW Asset Management as part of a Reg A+ offering. The company says it is preparing to go public next year. 

Policy moves

  • New Jersey lawmakers passed cannabis legislation on Thursday, providing the regulatory framework for cannabis sales in the state. This comes around a month and a half after New Jersey voters passed marijuana legalization in November. Read our list of the top power players to watch in the state as New Jersey's cannabis industry shapes up.
  • The Senate passed the bipartisan Cannabidiol and Marihuana Research Expansion Act on Tuesday night to promote and expand research into the effects of marijuana use. 
  • The U.S. Federal Trade Commission is cracking down on false label claims by CBD manufacturers and brands, issuing fines and sanctions to six companies that are accused of misleading consumers. 
  • The DEA will allow more businesses to grow marijuana for federally sanctioned research. Previously, one lab at the University of Mississippi was the only legal supply for researchers, constraining what studies could be conducted. 

Science and Research

  • A new study published in the journal Cannabis and Cannabinoid Research found that cannabis products available in both medical and recreational dispensaries hold promise as an alternative treatment for PTSD. 
  • The proliferation of hemp crops in the US has made bee populations very happy, according to new research published in the journal Environmental Entomology. The researchers found that hemp can provide a crucial nutritional resource to many bee species. 
  • A study conducted by the University of Michigan and released by the National Institute on Drug Abuse found that there was no significant increase in teen vaping or marijuana use over the past year, after a significant increase over the preceding two years. 
  • Cannabis company Biomedican says it has discovered a new class of cannabinoids: Sesqui-CBG. 

Chart of the week

Cannabis revenues are expected to get a big boost in the five states that voted on cannabis reform last month, according to projections from New Frontier Data. In Arizona and New Jersey, especially, which voted to transition from medical cannabis programs to adult-use in November, revenues are expected to balloon. In Arizona, the regulatory change is expected to boost sales by more than $1 billion, in New Jersey, the boost is expected to be even more significant:

Sawyer Click

What we're reading

Inside Curaleaf Billionaire Boris Jordan's Hunger To Become The 'Frito-Lay' Of Cannabis (Forbes)

Can Psychedelics Help Us Face Our Fear of Death? (DoubleBlind)

Home growers could still face draconian penalties once weed is legal in New Jersey (Politico) 

Cop Budgets Benefit from Cannabis Legalization, Sparking Backlash in 'Defund the Police' Era (VICE)

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