Mergers and acquisitions: 2 big cannabis players unite

An all-share deal recently went down in the cannabis industry to the tune of millions of dollars. WeedMD Inc., an Ontario cannabis grower, recently acquired Starseed Holdings Inc. The mergers and acquisitions deal is worth $78 million. Starseed Holdings is backed by the Laborers' International Union of North America (LiUNA), which is investing $25 million in WeedMD.

The CEO of WeedMD said the cash will help the company in an industry where financing is becoming difficult. Starseed -- based out of Toronto -- has a different business model from most competing companies. Its subsidiary company, Starseed Medicinal,  provides cannabis to union members who have insurance coverage for it. It sells cannabis at preferential prices to LiUNA Local 183 members who need it. The company buys cannabis at wholesale prices rather than cultivate it itself.

After the deal was announced, WeedMD stock fell about 20%. The company's quarterly sales also fell to $6.7 million from $8 million from the previous quarter. Starseed is WeedMD's first acquisition of a licensed producer. The company recently purchased a large greenhouse in Ontario for more than $22 million. It is also in the midst of turning its original growing facility to one that will handle processing and packaging.

Many mergers and acquisitions deals in Canada are worth millions of dollars. With this kind of money on the line, having an experienced lawyer's advice is a necessity. These deals must adhere to the business laws that govern them. A lawyer may be able to offer wise advice during every stage of the process to ensure all i's are dotted and all t's are crossed. 

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