The line that divides Canada from the U.S. is looking more and more illusory for the cannabis industry.
The 49th parallel used to be a big deal for marijuana growers. Canada’s legalization in 2018 spurred a generation of startups north of the border and investors flooded in with the hope they would follow the path of Canadian alcohol companies, which got a head start on U.S. competitors before prohibition was repealed.
Now, as more U.S. states have legalized cannabis, American firms have overshadowed their Canadian peers. And some Canadian companies, unable to export into the U.S. with its larger population, stagnated. But a series of creative deals may upend those dynamics.
Tilray Inc.’s purchase of MedMen Enterprises Inc.’s debt last week is the latest example. It’s similar to the first such creative cross-border deal, Canopy Growth Corp.’s option to buy U.S. company Acreage Holdings. Both could let Canadian companies buy a U.S. target if legalization occurs. It’s the third deal that gives Tilray a leg up on U.S. legalization: Its Aphria merger gave it SweetWater Brewing Company in Atlanta, which it can leverage to make THC drinks or distribute cannabis in the Southeast, while Manitoba Harvest could convert to selling THC edibles.
Canadian retailer Fire & Flower also made a creative cross-border deal earlier this month by opening a dispensary in Palm Springs, California. While Canadian companies can’t export marijuana to the U.S., the store was created through a licensing partner, American Acres, which officially changed its name to Fire & Flower U.S. Holdings. The licensing agreement will also let it open stores in markets like Arizona, Nevada and other areas in California over the coming months, Fire & Flower said.
Published: August 23, 2021
Founder & Interim Editor of L.A. Cannabis News