Kadenwood buys EcoGen Lab to create $250 million CBD supplier

(Reuters) - California-based Kadenwood LLC said on Thursday it would buy EcoGen Laboratories as it looks to tap into rising demand for hemp-derived cannabidiol (CBD) products, while creating an integrated supplier worth about $250 million.

CBD, a derivative of the cannabis plant, is believed to ease anxiety and other ills without the high of its close cousin, marijuana. The product is legally allowed to be sold throughout the United States and can be infused with food and drinks.

The deal will help Kadenwood, which grows its own hemp and sells packaged products derived from it, gain access to EcoGen’s industrial-scale capacity for making ingredients and extracts.

“For us, it was the right time to unite the two very strong brands in the space. Both that are individually focused on different segments of the market - consumer packaged goods and the ingredient space,” Kadenwood Chief Commercial Officer Garrett Bain told Reuters.

Kadenwood, which according to Chief Executive Officer Erick Dickens is valued at about $180 million, did not disclose how much it was paying for EcoGen.

EcoGen generated over $63 million in revenue last year and closed a $40 million funding round earlier this year.

The cannabis industry is anticipating a wave of mergers after the coronavirus pandemic created a demand windfall and as the upcoming U.S. general elections are expected to pave the way for more favorable legislation.

The CBD market could collectively reach $20 billion in sales by 2024, according to BDS Analytics and Arcview Market Research.

While Kadenwood is “being managed to potentially go public on either the Nasdaq or the NYSE,” the company has not made any specific plans at the moment, Dickens said.

Reporting by Shariq Khan and Arunima Kumar in Bengaluru; Editing by Anil D’Silva