Our country's largest cannabis seller is pressing a hostile takeover of its Canadian counterpart.
Not many years ago, the Connecticut-based Curaleaf Holdings and Aurora Cannabis, of Edmonton, Alberta, each had market caps above $12 billion, as investors bet legal weed would become as big as booze.
That didn't happen. So after falling 95% and 99% from their respective peaks, Curaleaf began a bid for Aurora in August. On Monday, the U.S. firm boosted its cash and stock offer by 25%, to $5 a share.
The States hasn't closed many deals with Canada lately, but Aurora shareholders should probably take Curaleaf up on its offer. Even after years of retrenchment, the licensed cannabis supply in both countries probably exceeds demand.
Curaleaf is turning its business around more successfully than Aurora. The U.S. firm had year-over-year sales growth of 10% in its June 2026 quarter, with pretax cash margins of 20%. Its shares are up fivefold from last year's low to a recent $10.
Aurora spent the first years of this decade unplugging the vast grow-houses it had built for a Canadian consumer who never lit up. At the same time it became a leading producer in Europe. Still, a turnaround remained elusive. Sales and cash earnings fell in June's quarter. Aurora's NYSE-listed stock sank below $2.60 a share.
Curaleaf CEO Boris Jordan made a friendly overture to Aurora chief Miguel Martin in June. After Aurora's board turned down a formal offer the following month, Curaleaf announced a hostile bid -- worth $4 a share -- on August 18. Aurora told its shareholders to decline the "inadequate" offer.
The U.S. company could make good use of Aurora's European production, and the U.S. firm tells Aurora shareholders that a combination would save $40 million in overhead. A merged firm would have annual sales of more than $1.5 billion, says Curaleaf's offering circular. It promises earnings before interest, taxes, depreciation and amortization (Ebida) of $350 million.
The combined companies might rate a market cap of $3 billion, says Curaleaf. While well below the $20 billion-plus the two firms enjoyed at the weed bubble's peak, a merged operation would be the world's largest licensed cannabis business.
Neither company would speak with Barron's, but on Curaleaf's August earnings call, Jordan reviewed his industry's latest reasons to be cheerful. In April, the Trump administration decided to move prescription cannabis to a milder category of controlled substances. Last week, a federal administrative judge delayed that change until next year.
If a similar reform follows for recreational weed, the changes should make banking easier for licensed cannabis businesses. The government might also end a federal tax stance that has refused corporate tax deductions for the industry's operating expenses. In the longer term, Jordan told his listeners that federal reforms might allow interstate shipments of cannabis, as well as international exports.
A common explanation for the legal weed business's tepid growth is that the illicit market continues with impunity. In recent years, edibles and vapes stoked with an intoxicating derivative of hemp appeared at a wide range of retail stores. That legal loophole is closing this year, and Jordon told his conference call audience that he hopes 2027 will see his industry return to double-digit annual sales growth.
If that happens and Jordan finds himself in command of the world's biggest legal cannabis enterprise, it will be a happy ending for his company. It had such trouble raising institutional capital that it got its start with a disguised $120 million loan from Russian oligarch Roman Abramovich.
Aurora greeted Curaleaf's increased offer Monday with caution -- telling shareholders to hold on to their stock until the Aurora board weighed the improved terms. The U.S. company says its offer remains open until Dec. 4.