Verano buys The Cannabist’s AZ and VA assets for $105 million

DEAL FLOW
Verano buys some of The Cannabist’s AZ and VA assets

What happened: Deal flow is picking up in cannabis. 

Cannabis multistate operator Verano will acquire some of The Cannabist Company’s operations in Virginia and Arizona in a $105 million cash-and-stock transaction, the companies said on Monday. 

The deal includes six stores in Virginia and two in Arizona, and includes cultivation and production facilities in each state as well. 

What they’re saying: “With Virginia, we will be in a prime position to once again take advantage of the extraordinary growth that is expected to come with an adult use program launch,” Verano CEO George Archos said. 

And: “We are continuing to optimize our footprint as we target building a better business, which includes deleveraging our balance sheet,” The Cannabist CEO David Hart said. 

What’s in the deal: In Virginia, the deal includes six dispensaries, one cultivation site, and one production facility. The Cannabist will remain in the Virginia market, with five retail locations around the Richmond area. 

In Arizona, the deal includes two dispensaries and a production facility. Overall, Verano is spending $90 million for the Virginia assets — a combination of $20 million in cash, $40 million in Class A shares, and a $30 million promissory note — and about $15 million in cash for Arizona. 

But, but, but: While cannabis companies are building out their footprint in Virginia, the state’s Republican governor has other ideas. 

Despite a comprehensive legalization bill passing Virginia’s legislature, Gov. Glenn Youngkin vetoed it. It’s unlikely that he’ll allow legal cannabis to take effect, regardless of how his constituents vote, as long as he’s in office. The state’s next gubernatorial election is in November of next year. 

So both Verano and The Cannabist may be forced to wait until they get the rush of business from a newly legal Virginia. But they clearly believe that Virginia will allow legal sales sooner rather than later, given the high price Verano is paying to get into the state. 

Back up: The Cannabist, formerly Columbia Care, is in the midst of a turnaround. The company is shedding assets to focus on core, profitable areas, recently leaving the Florida market entirely. 

It has new leadership in Hart and Jesse Channon, who was appointed president earlier this year. 

And more: Last week, we reported that cannabis marketplace LeafLink will buy Dama Financial’s banking platform. 

-JB

“They have been through 90% of the comments, and in those 90%, there is no need for an ALJ hearing. I’ve also heard they’ve gone through SAM’s (Smart Approaches to Marijuana, an anti-cannabis reform advocacy group) comments, and there’s no need for an ALJ on that. So that’s what we’re hearing, but I’m not saying that’s 100%. [But] we have enough tentacles into DC to say that’s good news,” Curaleaf Executive Chairman Boris Jordan told The Dales Report. 

Jordan was referring to the over 40,000 comments that came in on the Drug Enforcement Administration’s proposed move to reclassify cannabis as a Schedule III drug.

DEA officials need to read through all the comments to see if there are any issues that would need to be heard by an administrative law judge (ALJ). If not, expect the change to happen quickly — potentially before the election in November. 

But consider a word of caution from us: Nothing is set in stone, especially if the information is coming from a company that benefits from this information being true. Still, Jordan is credible and well sourced in DC. 

Watch the full interview. 

CRS says no more 280E under Sched III 🌿

A new report from the Congressional Research Service says that cannabis companies will be able to deduct business expenses if cannabis is reclassified to Schedule III. And, cannabis companies will be able to advertise in newspapers and magazines — but recreational cannabis will still be illegal, as all Schedule III drugs need to be prescribed. Congress will need to sort out what that means for state-legal dispensaries. Read more. 

Economic impact of cannabis in FL 🦩

Retail cannabis sales could add $200 million to Florida’s tax coffers, according to an analysis from the state. And, the state made 66,000 arrests for simple possession, which cost it about $13 million per year, per cannabis information site Leafly. Read more. 

THE Ohio state cannabis sales are imminent 🏈

Ohio’s Division of Cannabis Control sent guidance to dispensaries about opening day rules and advertising regulations, in the latest indication that the state’s legal cannabis sales are soon to begin. Ohioans voted to legalize cannabis in November. Read more.

Greenlight is opening a dispensary in Rock Port, Missouri — right on the border of Iowa and Nebraska, two states that don’t allow legal cannabis sales.

Canadian cannabis company Tilray reported its fourth-quarter and full fiscal 2024 results. The company reported a $15 million net loss on $229 million net revenue for Q4, up from $184 million the year prior. For the full year, the company reported a $222 million net loss on $789 million of revenue. Read more. 

Canadian company MTL Cannabis reported a $2.5 million (CAD) net income on $83.1 million in revenue for the full fiscal 2024 year.

Cannabis users see a 42% lower prevalence of metabolic syndrome — a collection of obesity-related ailments like high blood pressure and cholesterol and belly fat — compared to non-users, according to a new study published in the American Journal of Medicine. Read more.

Illinois dispensary Smokehouse is opening the state’s first “dockside” cannabis shop on Fox Lake. Boaters can pull up, dock, and get legal cannabis.

Why is impairment detection like Moneyball? | NDASA News 

Tilray placed a huge bet on craft beers. Here’s how that’s going for the cannabis company. | MarketWatch

California’s biggest weed brand is getting buried in lawsuits | SF Gate

Cannabis legal experts emphasize uncertainty with rescheduling at Chicago conference | Green Market Report

Why finding locations for legal marijuana businesses is so challenging in Ohio | Cleveland.com