An Underrated Merger Just Happened That Cannabis Investors Shouldn't Overlook

A lot of the hype in the cannabis industry right now is around the Aphria (TSX:APHA)(NASDAQ:APHA) and Tilray (NASDAQ:TLRY) merger that is about to complete. And Canopy Growth (TSX:WEED)(NASDAQ:CGC) also recently announced that it would be acquiring Supreme Cannabis (TSX:FIRE). These are some notable moves involving the bigger names in the Canadian cannabis industry. However, there is another merger that may unlock even better returns for cannabis investors.

Greenlane Holdings (NASDAQ:GNLN) and KushCo Holdings (OTC:KSHB) will also be joining forces in one of the rare mergers that investors have seen involving two companies in the U.S. pot market. Since marijuana is still illegal federally in the U.S., deals there are much more scarce.

But unlike multistate operators, these companies aren't in the business of growing marijuana. Instead, they help provide producers with what they need to help sell their products. KushCo, for example, supplies vaporizer hardware and packaging supplies.

Greenlane, meanwhile, distributes rolling papers, grinders, and other ancillary products.
KushCo has a market cap of just $170 million U.S. while Greenlane is at $100 million U.S. That's a drop in the bucket compared to Canopy Growth, which is worth approximately $14 billion. At a much smaller valuation and the ability to tap into the fast-growing U.S. cannabis market, the combined KuschCo-Greenlane company could potentially deliver much more upside for investors.

As they are involved with ancillary products that can be easily transported across the U.S., there can be significant efficiencies to be gained from this deal which can lead to strong results over the long term.

Year to date, KushCo is up 61% and Greenlane has improved 54%.