By Spencer Feingold

A day after the Canadian cannabis giant Canopy Growth announced a deal to acquire the U.S. medical cannabis company, Acreage Holdings, investors are eyeing consolidations in the legally-grey industry.

“Consolidation like this will separate the wheat from the chaff and the men from the boys and all those analogies,” Matt Hawkins, the managing principal at Cresco Capital Partners, told Cheddar in an interview Friday.

Cresco Capital Partners has invested over $50 million into the cannabis industry since 2014 and was an early backer of Acreage.

Canopy Growth ($CGC), which is the world's largest legal cannabis producer, currently trades on both the New York Stock Exchange and the Toronto Stock Exchange. But because marijuana still illegal on a federal level in the U.S., Canopy is prohibited now from doing business in the U.S.

“It is a deal that was announced and yet it is not happening. There needs to be some trigger and change in federal regulation for it to actually close,” Hawkins said, adding that his return on investment will increase when the deal actually goes through.

Despite having political backing and board members like former U.S. House Speaker John Boehner, Acreage is still beholden to federal law, which limits growth in the industry.

“John Boehner is a fantastic, high profile political board member for them but John Boehner is not driving the train on when this thing becomes federally legal,” Hawkins said.

The Acreage deal follows another major purchase in the industry by Harvest Health & Recreation, which announced last month it is set to acquire Verano Holdings for a reported $850 million.

“Consolidation, which has been kind of on the periphery, is happening now, but again there needs to be a trigger for this cash to come into the U.S.,” Hawkins said.

Hawkins added that until there is a change in the federal statute, there will be “dearth of capital” in the industry and “companies are going to be struggling to find the capital they need to grow.”