Article by Tyler Nyquvest, Business in Vancouver
One of the largest corporate finance deals of 2017 was Invictus MD Strategies Corp.’s (TSX-V:IMH) acquisition of Acreage Pharms Ltd.
The deal added 6,600 square feet of facility space to Invictus’ 250 acres of production capacity.
At the time of acquisition, Acreage was expanding its facility to accommodate the coming market demands from the legalization of recreational cannabis. The 6,600-square-foot facility was the first completed project in a three-phase expansion.
The second phase will enlarge a concrete and steel facility in Acreage’s 60,000-square-foot secured perimeter that sits on 150 acres of land. The third phase, which is awaiting permits, is a 76,750-square-foot expansion on the property.
The Invictus acquisition, which happened nearly a year ago, reflects a growing cannabis industry trend of big fish eating little fish.
“Large companies to date really aren’t showing much profit,” said Terry Roycroft, president of the Medicinal Cannabis Resource Centre Inc.
Roycroft references Aphria’s (TSX:APH) recent acquisition of Broken Coast Cannabis, noting that Broken Coast was one of the few Canadian cannabis companies generating a profit due to quality product and brand popularity but bound by growth constraints.
“[Broken Coast] was purchased for a 30,000-square-foot facility that had just been built and they had only been in business for about four years,” said Roycroft. “They were purchased for nearly $230 million.”
Broken Coast, a licensed producer from Vancouver Island, represents what the big fish are now looking for: small, craft growers with specific, quality strains of product and strong brand presence.