Industries Served

Cannabis

Cannabis Cultivators
Cannabis Oil Producers
Pharmaceutical and Drug Manufacturers
Cannabis Paraphernalia Stores
Hospitals and Therapy Centers
Pharmacies and Drug Stores
Government-controlled Dispensaries
Alcohol and Beverage Manufacturers and Distributors

Beacon has experience working with professionals in the cannabis and related sub-industries.

Mandate

Beacon was engaged by a popular retail Cannabis culture shop, The Friendly Stranger, located in Toronto’s eclectic Queen Street West neighbourhood. The business specialized in selling smoking pipes, vaporizers and other cannabis-related paraphernalia. The owners, at the time, were approached by a private equity firm focused on creating an ecosystem within its portfolio investments that would help fuel growth and innovation in the cannabis industry. Due to Beacon’s expertise in business valuation, we were engaged in an advisory capacity to provide an assessment of the business’ fair market value.

Implementation

Beacon began by carefully assessing the medical and recreational cannabis industry in Canada. We assessed the macroeconomic and regulatory environment impacting the cannabis space. Our client had agile relationships with several suppliers, cultivators and experienced professionals in the cannabis space. In addition, the business’ reputational goodwill effectively positioned it to become one of Canada’s largest independent cannabis retailers post-legalization. Beacon realized the business’ growth potential and factored this growth into our valuation assumptions. Throughout the valuation process, we were closely involved with our clients and made sure we developed a deep understanding of the business and its operations.

Outcome

As an independent third party advisor, Beacon was able to provide an unbiased fair-market value assessment to our clients. In addition, due to our large network of industry professionals, Beacon assisted the business in finding legal counsel to assist with the transaction process. Due to Beacon’s involvement, the business was successfully acquired by Green Acre Capital. The end result was an addition to Beacon’s family of satisfied clients.

Industry Overview

This industry includes all licensed producers, wholesalers, distributors and retailers of cannabis, drugs and products containing cannabis, and cannabis-related paraphernalia, operating under Health Canada’s regulations. The cannabis industry is a new and emerging industry and has seen a lot of activity since Canada legalized marijuana in 2018. Suppliers for cannabis cultivators and producers include fertilizer and pesticide companies, lighting, bulb and appliance manufacturing companies. Suppliers have little power in the industry and are used by cultivators to produce in bulk. The current market is still developing, and currently, end users range from recreational customers to medical patients. As more applications of cannabis evolve, this will give rise to more sub-industries, and consequently, high M&A volume due to the potential for vertical and horizontal integration. The industry is highly opportunistic and is currently in its growth stage. In Canada, Canopy Growth Corp, Aphria and Aurora are the largest players with many smaller players emerging. Despite heavy regulations, we are seeing a number of new entrants which further indicates the untapped potential of this industry. For this reason, middle market advisory firms have been focusing their attention on this industry as well. The industry is primarily driven by per capita disposable income and health expenditure. Over the last decade, there has also been an exponential increase in mental health issues like anxiety and depression, which cannabis has been proven to help treat. In addition, government regulation and changing social attitudes towards cannabis will further fuel demand and generate tailwinds going forward.