FOLLOWING a whirlwind year of acquisitions, fund raises and a debut on the NASDAQ stock exchange, IM Cannabis (IMC) is now entering the next phase of its lifecycle.
The international cannabis company, which sells products to both the medical and adult-use markets across Canada, Israel and Germany, is putting the breaks on its ambitious acquisition strategy, which has enabled its combined revenues to skyrocket nearly 150% over the past year.
Instead, IMC’s CEO Oren Shuster says the company will shift its focus towards consolidating these acquisitions into a cohesive, efficient group capable of delivering organic growth.
“Definitely most of the focus is internally now,” Mr Shuster told BusinessCann.
“We’ve done acquisitions, but now we need to integrate them and make sure that we are growing organically. To grow only by M&A, it’s very easy. But M&A is fundamental for organic growth because this is the added value that M&A brings.
“So definitely, we want to grow organically, and to enjoy the benefits of the M&As. We want to make sure that the company is well integrated, very efficient, and makes profits. And then we’ll continue with more M&A.”
First Year on the NASDAQ
Since launching a secondary listing on the NASDAQ in March 2021, IMC’s share price has dropped to nearly a fifth of its original value.
When it launched onto the US stock exchange, the company’s share price stood at around $9.40. After rising to highs of $10.26 over the next two days, IMC’s share price has gradually dropped by nearly 80%, now sitting at around $2.
This has been mirrored almost exactly on the Canadian Stock Exchange, dropping from $11.30CAD to around $2.51CAD since March 2021.
Mr Shuster remained unphased about the company’s stock price, stating that ‘what is happening now in NASDAQ is part of what is happening in the markets.’
He added: “For IMC it’s about the long term and building infrastructure. That’s markets, they go up and they go down and we don’t have any control over that.”
Despite the marked drop in share price, IMC is just one of dozens of cannabis companies to experience a tough year in the US and Canadian markets.
This is especially true of companies like Tilray and Aurora who, like IMC, have eluded profits in favour of acquisitions.
News that IMC will now turn its focus away from M&As and towards organic growth, will likely be good news for investors.
Alongside this, last week IMC announced the appointment of investor relations specialist MZ Group to lead the company’s strategic investor relations and financial communications program across all key markets.
MZ will be tasked with increasing the company’s ‘visibility throughout the investment community’ over the next few months.
A ‘Very Busy’ 2021
2021 was a transformative year for IMC, which told BusinessCann back in June that while it ‘may be old’ it was ‘very young in our international presence’.
Six months later and Mr Shuster says he believes ‘IMC is very international today’, and has laid the groundwork for a ‘globally integrated supply chain’ he believes will be crucial to capitalising on the European opportunity in the coming months.
Just a week after becoming the first Isreali medical cannabis operator to list on the NASDAQ on March 1st, it announced a multi-year supply deal with Canadian licensed producer GTEC Holdings which would see it import high-THC medical cannabis into Israel.
Later in March it closed the acquisition of Canadian adult-use cannabis retailer Trichome Financial Corp, previously announced in December 2020, officially marking its entrance into the North American recreational market.
Its Canadian operation was further reinforced just two weeks later on April 1st when it announced plans to acquire ‘premium’ branded cannabis brand MYM and its subsidiary Highland Grow.
‘Overall Readiness for Recreational Market’
In January 2022 the company announced that it had successfully completed its first importation of 400kgs of cannabis from Trichome into Israel, and has plans to begin selling this product through its ‘Wagners’ brand in both Israel and Germany later this year.
“Now we must focus on the strategy behind those acquisitions, because they were not accidental, they were part of a plan,” Mr Shuster explained.
“We went into the Canadian market because we were looking for a constant supply of premium, high-quality products, mainly for our markets in Germany and Austria.”
While Mr Shuster says the European market is still in its ‘infancy’, its future will be ‘about the ability to have a constant supply of high quality products’ to the market.
Alongside building a reliable source of product from Canada, IMC has also worked to build a distribution hub in Germany ‘as part of our overall readiness for the recreational market’.
He added that the German, and subsequently the wider EU market, ‘is going to change significantly’ over the next few years, but will have very ‘high barriers to entry’.
“Companies that are already in those markets have a huge advantage over newcomers. So it’s very exciting. And in 2022, we’re going to focus on those markets and build much stronger infrastructure.”
