Terrascend will buy Michigan-based rival Gage Growth Corp, backed by prominent cannabis investor Jason Wilde, for around $545 million, the U.S. pot producer said on Wednesday.

Dealmaking in the U.S. cannabis industry has heated up this year as companies bank on Democrats' promises to reform marijuana laws and potentially legalize the plant at the federal level.

However, little progress has been made so far and weed stocks have fallen off a cliff in recent months. Gage Growth shares have plunged about 22% up to its last close, since its direct Canadian listing in April.

Gage Growth, which closed its first day of trading at C$2.89 ($2.29) on April 6, will receive an implied consideration of C$2.66 per share in the merger.

The combined company will have operations in five U.S. states and Canada, including seven cultivation and processing facilities and 23 operating dispensaries in the two countries, Terrascend said in a statement.

($1 = 1.2596 Canadian dollars) (Reporting by Shariq Khan; Editing by Shailesh Kuber)