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Scott Hammon is Partner and leader of the cannabis practice at MGO. With more than thirty years of experience assisting public and private growth companies, he has taken multiple entities from the development stage through a sale, initial public offering, or other go-public transaction on both domestic and international securities exchanges.
Topics include:
- Got into cannabis with MGO from working with state and local governments in California - insights from governments made them aware of the growing industry. One of their first deals was an audit of a Bay Area company that became the first plant touching public company in the US, that gave them a name in the industry.
- Core difference between tech boom in late 90s to cannabis boom. Applying skill sets from other industries. Essential to be flexible, innovative and creative.
- M&A in the cannabis industry - lots of headlines promising deals that didn't end up getting done. Now we're on the cusp of another burst of M&A, but one more grounded in fiscal responsibility. Acquiring valuable licenses are opportunities that are present for single and multi state operators and ones in different areas of the market. The value of limited licenses. Most now focused on having multiple strong regional markets as opposed to one strong national presence. Being expansion oriented in certain clusters of the States.
- Covid as an accelerator of already apparent trends - primarily in cannabis retail. For instance Planet 13 (PLNHF) moving from traditional retail to full-entertainment space. Full legalization not likely soon - will probably be like sports betting - a version of States' rights leading to some murky regulations, but hopefully some other regulatory relief and more access.
- When M&A makes sense - when the sum is greater than the parts. We'll see more of that when we move further into consolidation - more selective M&A. Still lacking a big chunk of traditional private equity and institutional capital, even though it's getting better. Each new deal is accretive, like we saw with the Green Thumb (OTCQX:GTBIF) deal.
- Canadian companies dealing with a more complicated environment and keeping an eye - and in some cases placing bets on - the US side and international as well; dealing with more working against them.
- Advising companies on going public. A few years ago many US cannabis companies were listing on CSE because of regulatory restrictions and valuation metrics. That has since been diminished if not closed. For US companies, OTC is now more attractive, but where and when to go public is unique to each company. Private capital also makes sense for some and SPACs in cannabis have also introduced another option.
- Beverages in cannabis will have disproportionate and rapid growth in the industry, as evidenced by Sweetwater deal. Constellation (STZ) has been betting on that for awhile and we should see trend continue.
