Curaleaf (CURLF) gains successful shareholder support for the acquisition of Grassroots
At the end of last week, Curaleaf jointly announced with G.R. Companies, Inc. ("Grassroots") that Grassroot's shareholders had approved the proposed Curaleaf acquisition of Grassroots. Curaleaf, a leading vertically integrated MSO in the U.S., initially announced its definitive agreement to acquire Grassroots back in July 2019. At the time, Grassroots was the largest private MSO. The acquisition was a cash and stock deal valued at approximately $875 million. However, the deal was amended in June 2020. The revised agreement eliminated a $75 million cash component of the original agreement and increased the Curaleaf share consideration from $40 million to $90.1 million. Street estimates value the new deal at $700 million, and Curaleaf also said that unspecified Grassroot assets in I.L., OH, and M.D. would be sold following the transaction's close to comply with local limitations on license ownership.
The combined entities will create one of the world's largest cannabis companies. Grassroots is a strong market leader throughout the Midwest, with an affiliated portfolio of over 50 dispensary licenses, including more than 30 operational dispensaries. The transaction is expected to strategically accelerate Curaleaf's expansion into I.L. and P.A., which are among the largest and fastest-growing cannabis markets in the United States. Grassroots also has a leading presence in new state markets in which Curaleaf does not currently operate, including A.R., ND, and V.T. The transaction is also complementary to Curaleaf's existing business in seven other states, providing additional scale and operating leverage in significant markets such as AZ, MD, MI, and O.H. The planned integration of Grassroots is expected to expand Curaleaf's presence from 18 to 23 states, with the combined company having over 135 dispensary licenses, 88 operational dispensary locations, over 30 processing facilities and 22 cultivation sites with 1.6 million square feet of current cultivation capacity.
Curaleaf is on the Hedgeye Cannabis Long Bias List.
Rhode Island opens applications for six additional medical marijuana dispensaries
At the end of last week, Rhode Island's Department of Business Regulation began accepting new applications for licenses to operate six additional medical marijuana dispensaries. Although state officials say that winning applicants likely will not be able to sell marijuana until the end of 2021, the other dispensaries will triple the number of retail outlets. The current three dispensaries, or "compassion centers," serve approximately 20,000 licensed patients, including out-of-state patients. The new licensees will not be allowed to grow their marijuana – the six additional compassion centers will be required to procure products from the 56 cultivators in Rhode Island. Licensee winners will be chosen through a lottery process.
Jamaica becomes the first Caribbean country to adopt cannabis standards
In a regional first, The Bureau of Standards Jamaica has developed and adopted new cannabis standards as the country moves to expand the exportation of locally grown medical marijuana. The standards launched last week were designed to be aligned with ASTM International guidelines. The American Society for Testing and Materials is an international standards organization, and their cannabis guidelines are oriented towards product quality and safety. This step towards increased regulation is intended to bring better and more rigorous quality control to the local industry, on par with the comparatively more stringent regulation found in other global markets.
