Don’t Be Fooled by the Canopy-Acreage Deal — Marijuana Legalization Is No Sure Thing

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Canopy Growth’s groundbreaking deal to buy Acreage Holdings provides no added indications that cannabis legalization is imminent in the United States.

The cannabis industry is booming, in case you haven’t noticed. Last year, global sales increased to $12.2 billion from less than $10 billion, and they’re forecast to rise another 38% in 2019, to $16.9 billion. The legalization of recreational marijuana in Canada, coupled with ongoing legalizations in the U.S. and the expected resolution of early supply-chain problems in California, the fifth-largest economy in the world by GDP (gross domestic product), is expected to drive the bulk of this growth.

This once-in-a-generation-type growth opportunity has also encouraged pot stocks to become aggressive. Since the beginning of 2018, we’ve witnessed numerous capacity expansion announcements with Canadian marijuana stocks, as well as a flurry of acquisition activity, especially among U.S. vertically integrated dispensary operators.

We’ve Never Seen A Deal Like This Before

However, nine days ago, we witnessed what could wind up being the most transformative deal in the history of the marijuana industry. Canopy Growth (NYSE:CGC), the largest pot stock in the world by market cap, earned the right to acquire U.S. vertically integrated dispensary operator Acreage Holdings (NASDAQOTH:ACRGF) for $3.4 billion in a cash-and-stock deal.

This purchase, should it go through, is unique for a variety of reasons. For starters, it’s an entirely contingent deal. [Read More @ Fool.com]