Can AI Technology Elevate M&A Deals in the Cannabis Industry?

by | Jun 29, 2022

Written by Editorial Team

A diverse range of articles covering the latest advancements in the cannabis industry authored by writers who prefer anonymity, former contributors, or collaborative groups.

The cannabis industry is poised to become the fastest consumer industry globally by 2028. Both recreational and medical cannabis use is on the rise worldwide. Experts claim that the Safe Act in 2021 that federalized legalization helped monetize the industry and fostered bank loans to cannabis-related companies – plus the advent of technology such as blockchain in cannabis and AI technology, cannabis companies are on a very secure prospect. It's not surprising that venture capitalists and M&A deals have drastically increased within such a booming market, multiplying the opportunities within. Approximately $5.3 billion in VC has been deployed into more than 500 cannabis-related firms since 2014. As the global market is projected to reach $100 billion by 2026, VC and M&A have quadrupled. So how can AI technology amplify such trends? What are the major M&A deals in the cannabis industry? Let's explore.

AI to boost cannabis-focused M&A

Either to optimize the safe delivery of cannabis products or by using AI to find out more about specific strain recommendations, AI is well present in the cannabis business. Machine learning, Artificial Intelligence, and blockchain are currently discussed as the main drivers of the industry's growth. On top of that, relying on AI and blockchain can help consumers get safer products and reduce illegal marijuana trading.

Various fields are touched by AI technology – from supply chain management to product compliances and network design. The aim is to better understand and predict consumer behavior and help cannabis businesses increase and scale their revenues. In the future, we could imagine consumers being able to order and pay for their favorite strains and get them delivered, all powered by AI and blockchain.

How AI technology can improve M & A deals alongside blockchain and smart contracts is increasingly catching everyone's attention in the business. At the end of 2021, cannabis companies grew, on average, $28 million over 70 funding events, which represents an increase of 86%.

A report by Deloitte highlights that AI can reduce the time spent reviewing contracts, a time-consuming task in the cannabis business. While gathering most data into a single source – let's say summarizing information from 1,000 contracts, for example – AI enables faster decision-making for cannabis companies seeking to acquire existing actors in the business. The progress enabled by AI technology can not stay unseen for a fast-growing industry like cannabis – which is turning into the number one consumer market in the world.

The Greatest M&A Deals in Cannabis

A few disruptive and innovative cannabis-related companies are already on the verge of becoming global leaders, thanks to AI and blockchain. GrowGeneration Corp, KushCo Holdings, Inc, and (formerly ISW Holdings, Inc) are examples. These firms have shown steady growth and adopted the latest AI technology to secure their investment or grow their revenues globally.

GrowGeneration Corp, which specializes in hydroponic and organic garden centers, has recently acquired Grow Warehouse. CEO Darren Lambert states, “Grow Warehouse is our third acquisition this year and boasts a team of 50-plus grow professionals and an additional 35,000 square feet across four state-of-the-art facilities. It's exactly the type of acquisition that will continue to position GrowGen for long-term growth and success.”

In parallel, KushCo Holdings, Inc, which provides ancillary services to cannabis businesses, has teamed up with ABSTRAX, a leader in the production of botanically-focused terpenes. The partnership enables them to combine state-of-the-art solutions such as AI technology that permits them to develop perfect aromas and flavors for terpenes-focused products.

Previously, ISW Holdings, Inc., today named, an innovative venture in telehealth and cryptocurrency mining, launched its initial Pod5 in crypto in partnership with Bit5, a renewable energy mining company located in Pennsylvania.

Key takeaway

Within just a year, we saw how M&A in the cannabis business exploded, thanks to AI technology, blockchain, and cryptocurrency, alongside flexibility in the legislation (Safe Act of 2021). In 2021, we could record an amount of 166 transactions in M&A in the cannabis industry, compared to only 39 just one year earlier. Such transactions enabled a greater understanding and scalability of cannabis-related businesses, which turned to AI technology, as seen in the case of GrowGeneration Corp,, and KushCo Holdings, Inc. We can foresee more significant M&A in the industry as the market flourishes.