For investors, the marijuana sector has been a roller coaster ride of volatility.

Industry experts however are optimistic about 2020 as Cannabis 2.0 could mark a turnaround for companies selling cannabis-derived goods such as edibles, beverages and vaping products.

In addition to marijuana legalization ramping up in more U.S. states, continued merger and acquisition activity is leading to larger, more established companies absorbing smaller firms.

One such example of this trend is how WeedMD Inc. www.weedmd.com is heading into 2020 with a major new acquisition that will position the company as a significant medical cannabis producer and provider in Canada.

In November, WeedMD acquired union-backed cannabis company Starseed Holdings Inc., a leader in selling medical cannabis to patient groups through drug benefit plans. Starseed has launched an industry-first partnership with Canada’s largest construction union, the Laborers’ International Union of North America (“LiUNA”), to provide medical cannabis as a fully covered drug benefit for its more than 100,000 members and retirees in addition to their respective eligible dependents.

As a result of the transaction, which closed in late December 2019, the LiUNA Pension Fund will make a $25 million investment in WeedMD. The cash infusion comes at a time when many cannabis companies are having trouble raising money amid a dramatic sell-off in cannabis stocks. This acquisition allows WeedMD to increase its distribution capabilities, maximize margins and access growth capital through a strategic investor.

“We are seeing that the cannabis industry has reached an inflection point - consolidations will happen more frequently but success will come to those with strong balance sheets, fiscal discipline and a focused approach,” said Keith Merker, CEO of WeedMD. “We are starting 2020 on a fully-funded, financially stable footing. In fact, sourcing capital during this climate will be a challenge for many in the industry but we’re fortunate that the timing has provided us with a relatively risk-free and creative way to inject fresh capital into our business.”

Since its founding in late 2017, Starseed has focused on building a unique sales platform that largely mirrors the pharmacy distribution model. By making cannabis a paid benefit, the company has removed many of the barriers to mass market uptake of medical cannabis.

WeedMD is widely recognized as a reliable source of quality-produced, medical-grade cannabis. Its product, sold in the adult-use market under the Color Cannabis brand, generally sell out as soon as it hits the shelves and consistently garners positive reviews from both medical and adult-use clients.

“We do foresee eventually making a move to expand internationally,” said Merker. “Up to now, we’ve been focused on scaling our quality production platform. While we’ve already started exporting genetics to Australia and Israel, we are a very pragmatic company and we prefer to perfect our local channels before we expand too quickly. We’re now looking at the potential opportunity for international growth and our Starseed partnership provides us with funding to make more strategic moves.”

Earlier this year, WeedMD was one of the first in Canada to commercially plant and harvest over 20,000 cannabis plants outdoors on a large scale. More than 35 strains were planted, including eight of WeedMD’s legacy strains. Many other experimental strains were cultivated, and this was the company’s first outdoor season and opportunity to figure out what works best – everything from proper nutrients, watering requirements, irrigation needs, air flow, etc. As a result, the company strongly believes it has found the appropriate mix of outdoor and greenhouse cannabis for the 2020 season and beyond.

WeedMD owns and operates a 158-acre state-of-the-art greenhouse, outdoor and processing facility located in Strathroy, Ontario. The company also operates CX Industries Inc., a wholly owned subsidiary of WeedMD Inc. CX Industries specializes in cannabis extraction and processing. WeedMD sells its products directly to medical patients and has strategic relationships across the seniors’ market.