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As the cannabis industry takes stock of 2024 and looks ahead to potential opportunities in 2025, many marijuana experts believe interstate commerce and mergers & acquisitions will be major trends in cannabis next year. America’s marijuana industry has dealt with constant change right from its infancy and the sector is slated to experience even more major changes in 2025 amidst shifting consumer preferences, changing regulations, and a challenging business environment.
The MJBiz Factbook estimates that cannabis sales in states with legal cannabis markets will hit a whopping $58 billion by 2030, meaning the industry still has significant room for growth. Cannabis industry stakeholders recently convened at MJBizCon 2024 to discuss the most significant challenges and opportunities available to America’s marijuana sector, and mergers & acquisitions (M&A) as well as interstate commerce emerged as among the most notable opportunities in 2025.
Marijuana mergers and acquisition deals are poised to surge in 2025 as cannabis companies with stronger finances gobble up over-leveraged firms, vice president of originations for private-market investment firm Chicago Atlantic and MJBizCon speaker Steven Ernest said.
Companies with more robust balance sheets and the capacity to expand their operations will be able to secure great M&A deals as the market sheds some players, making now the best time for marijuana companies to purchase assets that can still generate cash flow.
Ben Gelt, an advisor of Greenspoon Marder, a firm based in Fort Lauderdale, Florida, notes that companies in good financial shape will be able to purchase struggling cannabis businesses cheaply in 2025. ‘Struggling’ companies include those that are still trudging along but lack the robust management they need to pull through or those that don’t have what it takes to ‘hang on’ in the current climate.
Interstate cannabis trade may also take some notable steps forward next year as more M&A deals are signed. The Panther Group’s chief operating officer, Michael Teller, predicts that the increase in mergers & acquisitions will allow established players in the U.S. cannabis market to cross state borders and enter new markets.
According to Teller, their ability to acquire equity and debt makes it easier for established cannabis players to complete these M&A deals as investors and lenders typically prefer cannabis operators that have a rich history of success. Established players who can obtain debt and equity usually have the operational strength and expertise required to scale businesses past state lines and thrive.
Since U.S. federal law prohibits cannabis trade between different states, larger players usually have to invest in building a separate operation from the ground up if they want to trade in a second state. Mergers and acquisitions make this unnecessary as they help firms to purchase already existing facilities, hardware, and even expertise in other states, allowing them to hit the ground running and set up interstate operations at a much faster pace.
Leading cannabis firms like Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) will most likely be looking out for opportunities to expand their footprint across the U.S. and other international markets that promise opportunities for growth.
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