High Times for M&A and IPOs starring RWB, Verano, GTI, AWH, Choice, Cresco, Parallel and more

Each month Grown In reports significant Midwestern cannabis fundraising transactions. Have a news tip on a private pot transaction? Email brad@grownin.com.

Red White & Bloom raises $13.5 million to close Illinois acquisition, acquires Acreage Florida

Transnational cannabis corporation Red White & Bloom (RWB) on February 11 announced that it has “arranged approximately $13.5 million” to fund the closing costs of its planned $40 million acquisition of a licensed Illinois cannabis cultivation facility initially obtained by nonprofit entity Shelby County Community Services (SCCS).  

Founded and run by serial cannabis entrepreneur Brad Rogers, Toronto-based RWB approximately one year ago entered the U.S. market via what appears to be a $50 million acquisition of Niles, Michigan-based vertically-integrated cannabis company PharmaCo.

RWB’s Michigan operations include two indoor cultivation facilities, one outdoor cultivation facility, and clear ownership of at least 10 dispensaries as well as stakes in at least eight more. 

The company’s U.S. headquarters are based in Granville, Illinois, home of a 3.6 million square foot hemp cultivation facility. 

A “Strategic Plan” included in RWB’s December 17 announcement of the planned SCCS acquisition stated “upon approval by the Illinois Department of Agriculture (IDOA), RWB intends to migrate the cultivation licenses to its wholly-owned subsidiary’s (Mid-American Growers Inc.) state-of-the-art 3.6 million square foot cultivation facility in Granville, Illinois.” 

As one of the initial 21 licensed cultivators in Illinois, SCCS can legally and commercially operate a 220,000 square foot cultivation site within its designated region. CSSC, which in 2017 was lauded for its conscientious rather than commercial intentions with the plant, currently operates a 24,000 square foot facility on two acres of land. 

After Grown In noted the announced sale in December, a chorus of MSO executives and longtime Illinois-based cannabis investors volunteered off the record that “there is no f-ing way” that RWB will receive state approval to relocate outside of the territory boundaries that match Illinois State Police District to an area currently housing a cultivator owned by Chicago-based Green Thumb Industries. 

In the meantime, RWB, which owns North American licensing rights for High Times, remains an active buyer of cannabis operations within states that have large populations and limited commercial competitors. On February 25, RWB announced the acquisition of the Florida operations of New York-based Acreage Holdings. The $60 million sale is seemingly part of a divestment strategy of Acreage, which also through acquisition owns cultivation and retail assets in Illinois.

RWB’s presence in the medical-only but quite booming $1.2 billion Florida market, where all operators are vertically-integrated, includes a 113,000 square-foot cultivation facility and eight dispensaries

RWB did not respond to inquiries about its Illinois expansion plans. A voicemail left for SCCS last week inquiring about the continuation of its previously stated mission to research cannabis in the context of mental health was also unreturned.

Chicago pot companies go public in very big ways 

Just as Chicago became the headquarters of a third multibillion dollar publicly traded cannabis company on Feb. 11 when Verano Holdings announced a reverse-takeover that allowed its shares to trade on the Canadian Securities Exchange, Green Thumb Industries (GTI) on Feb. 9 cleared a $100 million investment from one unnamed institutional investor through the U.S. public markets.

As Barron’s reported, the SEC “declared the registration effective”, signaling greater public potential for other proprietors of a plant that remains federally illegal. 

If these two transactions don’t illustrate how Chicago is rapidly consolidating its place as cannabis capital of the U.S., consider the following transactions that also occurred in February. 

  • On February 12, Choice Cannabis, a holding company founded by Cresco Labs co-founder Joe Caltabiano and GTI co-founder Pete Kadens, announced that it raised $150 million through a Special Purpose Acquisition Corp traded on Toronto’s NEO Stock Exchange. Caltabiano told Grown In that the company is focused on making near-term acquisitions in Illinois and other states with large populations and limited competition.
  • Cresco Labs announced on February 16 that it paid an undisclosed sum to acquire 4 Ohio dispensaries and is now fully operational in the state. 
  • On February 22, Chicago corporate scion William “Beau” Wrigley Jr. announced that his Atlanta-based Cannabis company Parallel will become public as part of a $1.9 billion transaction with acclaimed music manager Scooter Braun.
  • A report by Forbes magazine that Parallel was close to acquiring a Chicago-based dispensary chain for $160 million led many to speculate that a combination of Windy City Cannabis dispensaries that won’t transfer from Grassroots Cannabis to Curaleaf as part of last year’s $840 million sale as well as one of Illinois’ few remaining independently-held cultivation facilities are the target of Parallel’s acquisition focus in the state. The company, which Wrigley acquired control of in 2018, is vertically-integrated in Florida, has operations in Massachusetts, and is one of the few medical marijuana license holders in Texas.
  • The stated plan for all of these Chicago-based companies, as well as east of the Mississippi cannabis concerns like New York-based Ascend Wellness Holdings which is vertically-integrated in Illinois, is to acquire as many cannabis businesses as possible within states that have large populations and limited licenses.
  • On February 26, Verano announced additional acquisitions in Illinois, Arizona, and Pennsylvania This included the $37.5 million ($17.5 million in cash and $20 million in equity) acquisition of medical and “plus one” recreational dispensaries owned by Chicago-based The Herbal Care Center. With recent acquisitions in Highland Park and Naperville, Verano now operates the maximum 10 Zenleaf dispensary locations in Illinois. 
  • As for Ascend Wellness Holdings, the company that bought its way into Illinois in 2018 with acquisition of cultivation and dispensaries owned by Springfield-based HCI Alternatives, and more recent acquisitions of Chicago-based medical and dispensary plus one license holders Modern Cannabis and Midway Dispensaries, there is no place like home
  • On February 25 Ascend announced that it would be acquiring 87 percent of the New York cannabis assets owned by Los Angeles-based MedMen for $73 million. New York State, large in population and low in incumbent license-holders, is expected to go legal soon.