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Cross-Border JV Could Re-Define Marijuana Sector

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Canada-based cannabis company Cronos Group Inc. (CRON) and MM Enterprises USA LLC said Monday that they have formed a cross-border joint venture to cater to Canadian consumers. The move comes as Canada plans to legalize adult use of cannabis by the end of this year.

MM Enterprises USA, LLC is a U.S. cannabis company with facilities in California, Nevada, and New York. The company anticipates going public in Canada in the second quarter of this year.

Cronos Group is a Canadian licensed producer and distributor of medical cannabis that also has a footprint in Germany, Israel, and Australia. The company recently became the first pure-play cannabis company traded on a major U.S. stock exchange, the Nasdaq.

The joint venture, called MedMen Canada Inc., will be a 50/50 partnership between the two companies. It will develop branded products and open stores across Canada.

MedMen Canada will be focused on a branded national retail chain, branded products, and research and development activities. It will have access to Cronos' 350,000 plus square feet of production facilities and future expansions, while leveraging MedMen's retail brand recognition.

Cronos operates two wholly-owned Canadian Licensed Producers under Health Canada's Access to Cannabis for Medical Purposes Regulations: Peace Naturals Project Inc. and Original BC Ltd.

Canada legalized medical cannabis in 2013 and has some of the largest cannabis companies in the world. The federal government has announced plans to legalize adult use later this year, which would make Canada the first G7 country to federally legalize adult use.

In January, Aurora Cannabis Inc. (ACB.TO) and CanniMed Therapeutics Inc. (CMED.TO) ended a protracted takeover battle with a friendly $1.1 billion merger between the two marijuana giants, but smaller rival NewStrike was not part of the deal. CanniMed walked away from NewStrike as part of its agreement with Aurora.

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