Several multistate cannabis operators based in or with significant operations in the Midwest raised new capital in the debt and equity markets in May, while a Chicago-based psilocybin startup went public.
Oklahoma-based Stability Cannabis raises $44m in venture capital, enters Missouri
Billing itself as “Oklahoma’s Cannabis Superstore”, Oklahoma City-based Stability Cannabis announced on May 20 that it raised $44 million in a Series A Round of venture capital financing.
Stability operates 95,000 square feet of indoor cultivation space, with an additional 60 acres of greenhouse and outdoor growing capacity to serve Oklahoma’s considerable consumer demand.
Sales for the state’s lightly regulated medical market exceeded $800 million in 2020. Oklahoma’s overall population is approximately four million.
While Oklahoma has a desirable customer base, most multistate operators shy away from competing in a market with nearly 6,000 active cultivation licenses, more than 1,400 processor licenses and more than 2,100 dispensaries.
Armed with fresh capital, facilities, and a 24-hour retail outlet, Stability is now inching toward multistate operator status.
Concurrent with its financing announcement, Stability said it will, pending regulatory approval, acquire a minority stake in an unnamed Missouri-based vertically-integrated operator.
Missouri state law requires cannabis businesses operating in the state to be majority-owned by its citizens. In addition to receiving minority equity investments, Missouri operators are actively turning to debt deals to fund capital-intensive cultivation and manufacturing facilities expansion.
Holistic Industries raises $55m in convertible debt
With an eye towards building out licensed assets in Missouri and West Virginia, Washington D.C.-based Holistic Industries announced on May 11 that it raised $55 million in debt financing.
Among the largest privately-held cannabis operators in the United States, Holistic is vertically-integrated in Michigan, Massachusetts, Pennsylvania, Maryland, California and Washington D.C.
Last September, Holistic raised $25 million via a sale-leaseback transaction with San Diego-based real estate investment trust Innovative Industrial Properties to fund the completion of a 63,000 square foot cultivation facility in the Detroit suburb of Madison Heights. The company is also opening one of Michigan’s first consumption lounges in Ann Arbor.
Sozo Companies sells Michigan headquarters to Innovative Industrial Properties
Vertically-integrated Michigan operator Sozo Companies on May 17 announced the sale-leaseback of its 85,000 square foot property in Warren to San Diego-based cannabis real estate investment trust Innovative Industrial Properties (IIP).
The transaction includes a $10.3 million property purchase as well as $5.7 million in reimbursement in tenant improvement costs.
Vertically-integrated Sozo currently operates retail locations for recreational and medical customers in Cheboygan and Muskegon, with plans to open as many as eight additional dispensaries in the coming year.
Publicly-traded IIP is active in Michigan, having acquired and leased back properties from Green Peak Innovations (formerly Skymint), Emerald Growth Partners, Holistic Industries, LivWell, Cresco Labs, and Ascend Wellness Holdings.
Justice Cannabis raises $22m via credit facility for New Jersey Expansion
Chicago-based multi state operator Justice Cannabis, formerly known as Justice Grown, raised $22 million from Palm Beach-based cannabis industry lender AFC Gamma.
Proceeds from the financing will be invested in building out a 72,000 square foot cultivation and processing facility along with one dispensary in Ewing, New Jersey. The May 6 press release announcing the deal noted that “the loan is secured by first-lien mortgages on Justice Cannabis Co.’s wholly owned real estate properties in New Jersey and other commercial-security interests.”
Justice operates a small cultivation facility in Edgewood, Illinois and obtained licenses to operate retail locations in Michigan and Missouri. Beyond the Midwest, Justice has licenses to operate cannabis businesses in California, Pennsylvania, Massachusetts, and Utah.
Last November, New Jersey voters overwhelmingly punched their ballots for legal pot via referendum that was signed into law by Gov. Phil Murphy in February. The New Jersey Cannabis Regulatory Commission is in the midst of establishing regulations for an adult use program.
Green Thumb Industries raises $217m in debt prior to Massachusetts and Virginia acquisitions
Earlier this week Chicago-based multistate operator Green Thumb Industries (GTI) announced it finalized an agreement to acquire Massachusetts-based vertically-integrated medical operator Liberty Compassion for an undisclosed sum.
The acquisition of a fully operational cultivation facility and two medical retailers in Massachusetts came less than one month after securing $217 million in debt financing on May 3.
Concurrent with that debt capital infusion, GTI last month announced its plans to enter the Virginia market with the acquisition of Dharma Pharmaceuticals. Dharma, which has one operating production facility and one retail store, is one of five licensed cannabis operators in Virginia.
While the Virginia General Assembly on February 5 passed two bills to legalize adult-use consumption, the first Southeast state to do so, industry observers say recreational sales in the state are years away from happening.
Nevertheless, having a foothold in an emerging and likely highly regulated market is part of an established gameplan for multi state operators who have access to debt and equity capital.
“They are going to want to continue to get into more states ahead of any changes to federal laws,” Morningstar analyst Kris Inton told Grown In at the time of the Dharma transaction.
Ascend Wellness Holdings Raises $80m in IPO
Shares for New York-based Ascend Wellness Holdings began trading publicly on the Canadian Stock Exchange May 4 as the company raised $80 million in a public offering.
Ascend is vertically-integrated with eight dispensaries in Illinois and multiple retail locations in Michigan. Earlier this year, the company paid $73 million to acquire the majority of MedMen’s New York operations.
Wesana Wellness goes public
A Chicago-based psilocybin startup co-founded by former NHL enforcer Daniel Carcillo and Fyllo CEO Chad Bronstein announced on May 6 a reverse takeover of a company publicly traded on the Canadian Stock Exchange.
Former Grassroots Cannabis CEO Mitch Kahn is also a director of Wesana Wellness, which includes Mike Tyson and George Steinbrenner Jr. among its investors.
