Article by Mark Rendell, Globe and Mail
Ontario cannabis grower WeedMD Inc. is acquiring union-backed cannabis company Starseed Holdings Inc., according to an individual with knowledge of the deal.
As part of the transaction, Starseed’s main backer, the Laborers’ International Union of North America (LiUNA), is making a multimillion-dollar investment in WeedMD, the source said. The Globe and Mail is not identifying them because they were not authorized to speak publicly.
Trading of WeedMD’s stock was halted Thursday afternoon at the request of the company, pending the news. The company had not released details of the deal by The Globe’s print deadline on Thursday evening, and the value of the transaction is not yet clear.
Neither WeedMD nor Starseed responded to requests for comment.
The cash infusion from LiUNA comes at a time when many cannabis companies are having trouble raising money amid a dramatic sell-off in cannabis stocks.
The speed of mergers-and-acquisition activity in the cannabis space has also slowed in recent months. But analysts predict mid-sized players such as WeedMD may need to start combining assets to strengthen their balance sheets and compete on scale as cannabis prices drop.
Toronto-based Starseed’s business model differs from most companies in the recreational or medical cannabis space. Starseed’s subsidiary, Starseed Medicinal Inc., focuses on providing insurance-covered medical cannabis to union members. It currently has an agreement with LiUNA Local 183 – the largest construction union in Toronto, with 57,000 members – to provide medical cannabis at preferential prices to members.
Starseed, a private company, operates out of a small production facility in Bowmanville, Ont., that it acquired from Canopy Growth Corp. in 2017 for $7-million.