With the ramp up to profitability in the cannabis industry taking longer than expected after nationwide legalization arrived last year, some of the biggest licensed producers are looking into other sectors for expansion.

Tilray (NASDAQ: TLRY) is now edging into the Canadian hemp and CBD sides of the industry by acquiring hemp food company Manitoba Harvest.

The acquisition will take place with Tilray acquiring all outstanding stock of FHF Holdings Ltd. and Compass Group Diversified Holdings, LLC (NYSE: CODI), which effectively gives them 100% control of Manitoba Harvest.

Upon the closing of the deal, Tilray will pay $150 million in cash and just over $127 million in shares to Manitoba Harvest, which will become a fully-owned subsidiary.

The terms of the deal see an additional $50 million in cash and $42 million in shares to be paid in six months, with an additional $49 million in shares to be paid if undisclosed business milestones are met by the end of the year.

Manitoba Harvest brings a diverse lineup of existing hemp products and two operational manufacturing and processing facilities into Tilray’s portfolio.

Commenting on this historic turning point in the combination of the hemp and marijuana industries, Tilray’s Chief Executive Officer and President Brendan Kennedy commented:

It builds on the strategic partnerships we have formed with consumer brand leaders and demonstrates our track record of disrupting the global pharmaceutical, alcohol, CPG, and food / beverage categories. We’re excited to work with Manitoba Harvest to develop a diverse portfolio of hemp-derived CBD food and wellness products in the U.S. and Canada.

Currently focused on hemp oil, hemp-infused granola, and hemp-based protein powder products, following the acquisition Manitoba Harvest and Tilray will launch a line of CBD products and a new series of branded wellness bars.

The move is expected to see Tilray making inroads into the U.S. CBD market shortly. A huge surge just occurred in the industry south of the border since the passage of the Farm Bill effectively legalized hemp in the U.S., leading to an explosion of CBD products and a frenzy of often confusing state licensing regulations.

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