Behind the billion-dollar deal on the US marijuana market

The acquisition of Cura Cannabis, an American marijuana company, was the largest acquisition in the history of the cannabis market in the United States, overwhelming the market with a billion dollars in the purchase price. The recreational and medical marijuana business of the Portland-based Cura company originated with a company in Massachusetts called Curaleaf Holdings Inc.

Investors estimate the entire startup at almost $4 billion. However, it’s predicted that its value will increase by 20% after the deal to buy all the shares of Cura begins to close, The Oregonian reports. They got their support from two billionaires, citizens of Russia.

Cura and Curaleaf

Both Cura and Curaleaf have very unorthodox corporate histories. They seek early benefits as “the cannabis business faces enormous uncertainty and rapid change. The fact is that recreational marijuana remains illegal in the U.S. under federal law. So it is unclear when or how this may change.

Medical marijuana is legal in 33 states, while recreational marijuana is legal in 10 states. This includes Oregon, Washington and, California. Illinois, which recently passed a law, will become the 11th state from January 1, 2020. However, under the federal Controlled Substances Act of 1970, cannabis is an illicit drug, along with heroin and LSD.

Therefore, traditional sources of financing, such as American investment banks, do not want to participate in this business. Attracting bank loans is impossible. Using credit cards and other traditional business tools to work in this industry is also impossible. All these prerequisites opened the door to the marijuana market for two non-traditional players closely connected in Russia: Boris Jordan and Andrei Bloch.

Russian billionaires invest in the American marijuana market. (Source)

The legal marijuana market is growing fast

The legal marijuana market in the United States is growing much faster than other consumer markets. It does not need to artificially create demand or innovate. Its task is to legalize a product that is already popular. Several hundred companies involved in cannabis cultivation and production currently have listings on the American stock market.

There is already a special “hemp” stock exchange index, as well as analysts specializing exclusively in this type of security. Despite the continuing ban at the federal level, those states where marijuana sale regulations already exist are a kind of test.

Authorities are issuing a limited number of licenses to grow and sell marijuana. Furthermore, large marijuana companies are consolidating to become even bigger. They are buying one another in pursuit of regional markets.

Currently, Curaleaf has 43 points of sale. All located on the east coast, they have 10 marijuana cultivation sites and 11 processing sites. With the acquisition of Portland-based Cura, Jordan and Bloch are able to invest.

Bringing in $40 billion to the country’s economy in 2021

According to Arcview Market Research, the U.S. market for legal marijuana could bring in $40 billion in 2021. This is compared to $16 billion in 2017. The amount includes direct and indirect factors, including the number of new jobs in the sector and tax deductions.

Furthermore, marijuana sales could reach $23 billion. It may be that some new forms of marijuana should be legal in 35 U.S. states by 2021.

Legal marijuana market could bring $40 billion into the US by 2021. (Source)

Capital reached $4.5 billion

Curaleaf is one of the few vertically integrated manufacturers of medical and recreational marijuana in the USA. The company has its own field-to-pharmacy production. Furthermore, they have a clear growth strategy in the most populated states of the USA.

In early April, Curaleaf bought California’s Eureka, gaining a foothold in the largest state. On this news and annual report, the company’s share price rose above the IPO, and its capitalization reached $4.5 billion.

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(Featured Image by GORBACHEVSERGEYFOTO)

First published in newtvnews, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Suzanne Mitchell

Suzanne Mitchell juggles the busy life of a full-time mom and entrepreneur while also being a writer-at-large for several business publications. Her work mostly covers the financial sector, including traditional and alternative investing. She shares reports and analyses on the real estate, fintech and cryptocurrency markets. She also likes to write about the health and biotech industry, in particular its intersection with clean water and cannabis. It is one of her goals to always share things of interest to women who want to make their mark in the world.