Canada’s Liberty Leaf Holding announced it has agreed to acquire an undisclosed stake in California-based Cannabis Botanical Group (CBG).
Led by President and CEO, Will Rascan, Liberty Leaf Holding is a newly formed public Canadian company with the goal of being an early leader in the global medicinal and recreational cannabis industry through being an accelerator for revenue generating businesses in the rapidly growing industry, according to the firm’s website.
CBG is a licensed producer, cultivator, and distributor of high-grade medicinal and recreational cannabis and this deal will give Liberty Leaf the rights to local and state licensed production.
“Liberty Leaf continues to progress our business model and source opportunities in the global legal cannabis industry and we are very excited about this opportunity within the multi-billion dollar legal cannabis industry in the USA,” said Will Rascan.
The exact terms of the deal have not been disclosed but will be finalized after the completion of due diligence regarding product analysis and legal ramifications surrounding distribution of assets in Canada.
“With a seasoned management team that has over five years of experience in the Regulated Medical Cannabis Industry, six dispensaries, four revenue producing warehouse grows and a valuable distribution license underneath the CBG umbrella, we are confident that an investment will well position Liberty Leaf and their shareholders for growth in California, the largest cannabis market in the United States,” said Rascan.
With the passing of Proposition 215 in 1996, California became the first medical marijuana state in the U.S. In the ensuing years, the state’s medical marijuana market has grown to a value of $5.4 billion as of last year, and with a proposition on the ballot this fall in five U.S. states for the legalization of recreational marijuana, the industry has the potential to grow to a value of $22 billion by 2020.
Crowded Space
The investment space in the legal cannabis sector is rapidly becoming more crowded as the industry shows signs of mounting maturation. State-level legalization of recreational and/or medical marijuana has now spread to 24 U.S. states, with five more states, including California voting this fall on the matter. This adoption is driving the sector to achieve greater recognition as a viable space for investment and growth. The legal marijuana industry is expected to see sales of $6.7 billion this year compared to sales of $5.4 billion last year, according to ArcView Market Research, reports Market Watch, and if key states such as California join in legalization, sales could top $25 billion.
“The industry is losing its taint as a drug industry and is becoming a much more sophisticated market,” Scott Greiper, president of Viridian Capital Advisors, a firm that tracks the industry, told Fortune in August. The advancement of cultivation systems and supply chain technologies, as well as research and development into new strains that could aid in the treatment of various health ailments are providing more credibility to the market and capturing the attention of seasoned investors, Greiper told Fortune.
Just this past summer, Chicago-based venture capital firm, Salveo Capital announced the re-launch of its cannabis-focused Savleo Fund I. Seventh Point, a Connecticut-based private equity firm focused on investing in legal medical marijuana cultivation and dispensary assets in the state of California, announced that its $750,000 friends and family round of fundraising has closed oversubscribed, and North American legal cannabis management company, MedMen, announced it is launching the $100 million MedMen Opportunity Fund. In addition, Jim Hagedorn, CEO of Scotts Miracle-Gro, announced his plans for investing $500 million in the legal cannabis space by the end of this year.
However, CBH does not view the passing of Proposition 64 this fall in California as a necessity for growth.
“CBG is already well positioned in the current landscape and will continue to expand its growth in both medical retail and commercial cultivation with or without the passing of recreational. California Proposition 64 vote will only advance the efforts to expand to a larger market by collapsing the current time frames set for expansion.”
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Lynda Kiernan