GTI picks up “option value” in Virginia with Dharma deal, says Morningstar analyst
Chicago-based Green Thumb Industries (GTI) earlier this month expanded into its 13th state by acquiring Virginia-based operator Dharma Pharmaceuticals LLC for an undisclosed sum.
Although Virginia last month became the first Southern state to legalize adult-use cannabis consumption, recreational sales are not expected to begin until 2024.
“This is about option value as the state won’t fully open up for another two and a half years” said Kris Inton, a Morningstar analyst who covers GTI and Wakefield, Mass.-based Curaleaf. “They are going to want to continue to get into more states ahead of any changes to federal laws.”
Inton added that the mergers and acquisitions wave in the cannabis industry that began in 2019 when Curaleaf announced its intent to acquire Chicago-based Grassroots Cannabis for $840 million will continue as the value of licensed cannabis assets will increase once banking laws are normalized. Further, cannabis companies with large geographic footprints today are better able to develop brands that resonate with consumers ahead of a more competitive national industry.
“Currently, this is a push marketing industry structure where cultivators own dispensaries or work to develop the right relationship with dispensaries to sell their products. Getting on the shelf matters,” Inton said. “Some believe that eventually this will be more of a pull market industry where consumers look for certain brands. It pays now to have a bigger footprint.”
Dharma is one of five vertical license holders for Virginia’s medical program and operates one production facility along with one recreational facility.
Trulieve goes national with $2.1 billion Harvest acquisition
A little more than one year after Phoenix-based multistate operator Harvest Health & Recreations’ $850 million acquisition of Chicago-based Verano Holdings was terminated, Harvest reached an agreement to be sold for $2.1 billion to Quincy, Fla.-based Trulieve.
With approximately 50 percent of the market share of Florida’s $2.3 billion medical program (recreational sales has not yet been legalized), Trulieve will expand its national footprint acquiring vertical operations in Arizona, Pennsylvania, and Maryland as well as assets in other states.
“I don’t think it’s any secret that Truleive, through its success in Florida, is now able to expand into other markets,” said Rob Friedman, founder of Miami-based Cannabis Lab, an industry education and networking organization.
In recent years, Chicago-based multistate operators including GTI, Cresco Labs, and Verano have acquired vertical operations in the sunshine state.
“Everyone knew all along that ultimately when Florida became big enough, the market players would come here,” Friedman said. “Now Trulieve is using its own growth in Florida to expand nationally.”
Verano and Dispensary open Chicago West Loop dispensaries
Verano Holdings and Dispensary 33, the first licensed marijuana retailer in Chicago, are the latest cannabis companies to infuse the West Loop restaurant and nightlife district with adult-use cannabis retail stores.
Following the 2020 opening of Acreage Holdings’ Nature’s Care West Loop location, Dispensary 33 is scheduled to open its 1152 W. Randolph Street “plus one” recreational dispensary today. Verano’s ZenLeaf “plus one” recreational location is at 222 S. Halsted is in the heart of Chicago’s Greektown. Verano co-founder and CEO George Archos, of Greek descent, is also the president and operator of Chicago-based Wildberry pancake restaurant chain.
NuEra, a vertically integrated Illinois cannabis company, also plans to open up a “plus one” retail location in the neighborhood.
Choice Cannabis shares now trading over-the-counter in Pink Market
Choice Cannabis, a Chicago-based Special Purpose Acquisition Corporation (SPAC) founded by Cresco Labs co-founder Joe Caltabiano and backed by GTI co-founder Pete Kadens began trading on the OTC Pink Market on May 12.
In February, Choice raised $150 million to fund acquisitions of U.S. cannabis operators in Illinois, with a focus on Illinois and other highly regulated states with a limited number of licenses.
“Trading our shares on the OTC allows us to provide greater transparency and access to our U.S. shareholders,” said Choice CEO Joe Caltabiano in a statement. “This is an important next step as we work towards effecting our qualifying transaction, which will aim to create a scaled, profitable U.S. cannabis multi-state operator with assets across key limited license markets.”