Trends in Cannabis M&A 2023

The cannabis industry has experienced an unprecedented surge in recent years, gaining momentum as more states and nations decriminalize or legalize its use. As with any burgeoning sector, mergers and acquisitions (M&A) have been pivotal in determining the market’s landscape, opening doors to consolidation, operational expansion, and strategy realignment.


As companies vie for market dominance and seek innovative ways to stay ahead, M&A activity not only reflects the industry’s growth but also highlights its challenges and opportunities.


As far back as 2021, the cannabis industry witnessed a surge in M&A activity. Riding on the wave of record sales in legal state markets during the pandemic, the industry saw a phenomenal inflow of blockbuster investments. Companies, driven by the allure of this ‘green gold rush,’ embarked on a race to enter new markets, enhance their operational capacities, and snap up novel intellectual property. This resulted in a whopping $17 billion in M&A deal activity just that year.

Economic Headwinds and Dampened Enthusiasm

Yet, like many rapid ascents, the industry soon faced challenges. The subsequent year, 2022, painted a stark contrast with M&A values in North America plummeting to $4 billion. This dip was attributed to many factors, including economic challenges and waning hopes of swift federal action favoring nationwide legalization.


While Canada took the lead by establishing a fully legalized national market, the decentralized approach in the U.S., driven by state-level legalization, represented a unique mosaic. The U.S. market potential dwarfed Canada’s owing to its significantly larger population, leading to a more pronounced M&A activity. Interestingly, the pace of U.S. state-level legalization caused shifts in M&A activity concentration across states.


Amidst this whirlwind of activity, specific names began to make headlines. Cresco Labs and Columbia Care, two industry titans, stood out for their individual operations and an ambitious merger attempt that would have reshaped the industry’s landscape. Announced in March 2022, this $2 billion merger, unfortunately, did not reach fruition, highlighting the underlying complexities and challenges in the M&A realm of the cannabis sector.

Drivers of M&A Activity

Mergers and acquisitions (M&A) are far from arbitrary; they’re propelled by a set of distinct drivers that either catalyze or restrain industry consolidation. The cannabis sector, being nascent yet rapidly evolving, presents its own unique set of influences.


In essence, the M&A activity in the cannabis industry is a complex interplay of market opportunities, legislative shifts, economic dynamics, and strategic foresight. Companies continually calibrate their strategies, balancing between aggressive expansion and sustainable growth.

Focus on Sub-segments

The cannabis industry, while often considered a unified entity, is truly a multifaceted ecosystem with varied sub-segments, each with its dynamics and potential.

Implications for the Future

The rapid growth and constantly shifting dynamics of the cannabis industry have made Mergers and Acquisitions (M&As) both an exciting opportunity and a daunting challenge for businesses. The past trends and case studies provide insights into the future implications of the cannabis M&A landscape.

Adaptability Required in Cannabis

Businesses and investors alike should remain alert, adaptive, and open to the myriad of possibilities the future holds. The cannabis industry, still in its budding stages, has already proven to be a dynamic and transformative force within the global market.


From the record-breaking M&A deals of 2021 to the more conservative, strategic moves seen in 2022, we’ve observed the industry’s adaptive response to external pressures and internal growth ambitions.

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