Greenspoon Marder partner, Steve Lenn, who has spearheaded the firm’s institutional cannabis merger, acquisition and finance practice, believes last week’s announcement of the $3.8 billion (U.S.) investment in Canopy Growth by Constellation Brands could be a watershed development, vastly expanding available sources and amounts of capital, increasing investment and capital formation, and fueling and accelerating both rapid growth and consolidation.
Since the opening of Greenspoon Marder’s
Phoenix office late last year, led by Mr. Lenn, in addition to continuing to expand its cannabis regulatory practice and representation of applicants and operators in multiple states, Mr. Lenn and the firm have been involved in hundreds of millions of dollars in finance and merger and acquisition transactions, representing large corporate consolidators, as well as traditional private equity firms and family offices that have begun to provide debt and equity to the industry.
Among other clients, Mr. Lenn has brought to Greenspoon Marder his substantial relationship with MPX Bioceutical Corporation, representing the company in connection with multiple acquisition and finance transactions. MPX, which is listed on the Canadian Securities Exchange, currently has cannabis assets in four states and Canada, and is pursuing an aggressive U.S. expansion plan.
Mr. Lenn commented that the size, source, nature and notoriety of the Constellation investment will ripple through the capital markets chain.
It further “legitimizes” the cannabis industry, continuing what seems to be its inexorable movement out of the shadows and into the mainstream, and may lead to further “stake-out” investments by players in industries that have been viewed as the likely ultimate exits: alcoholic beverage, tobacco and pharma companies. The possibility that this may be the beginning of a trend could accelerate investment by those that wish to have the pricing and selection advantages from which early movers may benefit. To the extent it further “validates” the exit assumptions that underlie and are driving forces of the growing appetite for investment in the industry. It could lead to a substantial and rapid increase of private equity and family office activity, as those that have already dipped their toes in the water increase their commitments, those that have been sitting on the fence are persuaded to act, and those that have not seriously considered the industry may conclude that the time is now right to do so. It is likely to really get the attention of and increase the number, market reach and capacity of financial intermediaries participating.
Greenspoon Marder’s Cannabis Practice is recognized as a national leader in representing clients throughout the cannabis industry. Among the first major law firms to establish a dedicated Cannabis Practice Group, Greenspoon Marder is at the forefront of this exciting and rapidly growing industry.
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