Chuck Schumer's Big Boys of Cannabis
Last week Senator Chuck Schumer weighed in again on efforts to legalize cannabis at the Federal level with a provocative phrase:
"“We don’t want the big boys to come in,” he said. “After all the pain that’s been occurring in communities like the one you represent in Brooklyn, where I’m from—to have the big boys come in and make all the money makes no sense."
In its email of November 22, another NY-based company, Viridian Advisors, a leading cannabis capital, M&A, and strategic advisory firm, answered the question that's now on everyone's lips: Exactly who are the "Big Boys" Schumer's talking about:
"The graph shows the market caps for the most prominent cannabis MSOs vs. other “big boy” sectors we think Schumer was likely referring to:
Big Alcohol, Big Tobacco and Big Food.
Another interesting observation from Viridian: "Schumer’s goal of keeping big companies from dominating the cannabis business represents either naivety or political posturing. The industry is capital intensive and will only become more so as it grows to a national scale. The industry will inevitably be swept up in a wave of consolidation post-legalization: the economics are too powerful to deny."
To that point, Viridian points out that:
"The graph shows how relatively small the largest cannabis companies are. Note the scale difference between the Alcohol, Food, and Tobacco companies and the MSOs. Annheuser-Bush InBev (NYSE: BUD), Mondelez Intl. (Nasdaq: MDLZ), and Altria (NYSE: MO) each have more than ten times the market cap of the largest U.S. MSO Curaleaf (CSE: CURA). BUD has nearly enough cash to write a check for Curaleaf and could probably finance the $25B purchase of the top five competitors."