M&A Activity in cannabis industry picking up steam as cannabis market projected to reach $70 billion by 2028

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A maturing cannabis industry has the potential for enormous growth — but only if growers, processors and retailers can minimize threats to their profitability and stability. The cannabis industry is poised for another year of huge growth in 2022, and the enterprises that will benefit the most are those best-positioned to manage risk. Additional threats and higher premiums won't inhibit industry growth, but cannabis businesses that prioritize risk management will benefit most. With legalization becoming more common, the cannabis industry has been on a roll. A recent article in HUB International projects that the U.S. cannabis industry hit a record $24 billion in sales in 2021, with expected annual sales of $70 billion by 2028.  The article said:

"Cannabis risks have always outpaced the availability of insurance, in large part because of its status as a federally outlawed substance and the dangers in extraction and production. But it now shares many of the same risks as other industries — catastrophic crop damage, cyber risk and a shortage of skilled workers.  Some relief for the industry's financial issues may be ahead: The SAFE and CLAIM Acts, if passed, carry with them the potential to bring traditional financial resources to cannabis operations.  Insurance for cannabis businesses remains expensive.  Cannabis Property-Casualty coverage is also expected to rise 10% to 20. These factors of additional risks and higher insurance premiums won't inhibit industry growth, but those cannabis businesses that invest in risk management will be the ones to benefit the most."

Active Companies active today in the cannabis related markets include:  Item 9 Labs Corp. (OTCQX: INLB), Trulieve Cannabis Corp.  (OTCQX: TCNNF) (CSE: TRUL), Verano Holdings Corp. (OTCQX: VRNOF) (CSE: VRNO), Green Thumb Industries Inc. (OTCQX: GTBIF) (CSE: GTII), Cresco Labs Inc. (OTCQX: CRLBF) (CSE: CL).

"Perhaps the biggest obstacle to cannabis industry growth is a lack of access to capital. The industry awaits passage of the SAFE and CLAIM Acts, which would allow cannabis businesses to accept loans from federally regulated institutions. Lending to the industry has been restricted because regulators have considered it a form of money laundering; the pending legislation would remove that criminal designation for banking and lending." 

The article continued: "… large cannabis enterprises with non-cannabis subsidiaries have more access to capital than small companies. Similarly, large cannabis organizations typically have an easier time obtaining private equity investments.  As a result, M&A activity will increase in 2022, as large cannabis businesses will have the means to acquire smaller competitors. What's more, expect Canadian cannabis companies — unburdened by federal restrictions — to increase their cross-border mergers and acquisitions."

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