Multi-state cannabis company Verano Holdings has entered into agreements to acquire all of the ownership interests of three subsidiaries of The Cannabist Company Holdings, a cultivator, manufacturer and retailer of cannabis products in the U.S.
Two subsidiaries, 203 Organix, L.L.C. and Salubrious Wellness Center, Inc. (together, the “Arizona Operations”) operate in Arizona, and the third subsidiary, Columbia Care Eastern Virginia LLC, operates in Virginia (the “Virginia Operations”).
“Today’s agreement further diversifies Verano’s portfolio, which, since the company’s inception, has remained focused on expanding our business into limited-license markets to scale both our wholesale and retail operations,” said George Archos, Verano chairman and CEO, in a news release. “This opportunity greatly increases Verano’s growth trajectory as we gain access to the coveted market of Virginia ahead of an adult use program and deepens our footprint in Arizona. 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.”
Virginia Operations
The Virginia Operations include one cultivation and production facility, along with six dispensaries, Verano states. The state’s cannabis program is uniquely structured in that the Commonwealth is split into five Health Service Areas (HSAs) with only one cannabis operator and retailer permitted to service each HSA.
Verano will become the sole cannabis operator and retailer for HSA 5 in Eastern Virginia, which is home to nearly two million residents, serving populated areas such as Virginia Beach, Chesapeake and Norfolk. The state’s legal cannabis program permits home delivery throughout the Commonwealth as well as wholesale opportunities to other HSAs, providing Verano the ability to serve patients statewide, according to the company.
Total consideration for the Virginia Operation, subject to adjustment, is $90 million. Upon Closing, Verano will pay closing consideration of $20 million in cash, $40 million in Class A subordinate voting shares and issue a $30 million promissory note, the company states.
Arizona Operations
The Arizona Operations include one cultivation facility, one production facility and two dispensaries, according to Verano. The company’s total Arizona cultivation footprint will expand to 90,000 square feet across three facilities. They will also operate eight dispensaries in the state, adding one in Tempe and one in Prescott.
Total consideration for the Arizona Operations is $15 million, Verano states. Once closed, the acquisitions will bring the company’s geographic footprint to 14 states, 15 cultivation and production facilities, and 150 dispensaries.
The Cannabist Company will maintain its Virginia operations in the Richmond region (HSA 4), with approximately 80,000 square feet of cultivation and manufacturing capacity, five retail locations in operation and one in development. Upon exit of the Arizona market, the Cannabist Company’s operational footprint will be in 13 markets, including previously announced divestitures that are subject to future closing, according to Verano.
