Business

Cannabis company acquires CT dispensaries as state launches recreational pot program

Getty

A multi-state cannabis company has closed one deal and signed two more to acquire three firms with marijuana dispensaries and a cultivation facility in Connecticut, according to an announcement this week.

Verano Holdings Corp., which has active operations in 12 states, closed its agreement with Willow Brook Wellness on Oct. 25. It signed agreements Wednesday to, if finalized, acquire Caring Nature and Connecticut Pharmaceutical Solutions Inc.

The move signals the Chicago-based company’s interest in entering Connecticut ahead of the launch of the state’s recreational-use program, after sales were legalized earlier this year. It’s one of several multi-state companies interested in the burgeoning Connecticut market.

Verano operates under brands such as Zen Leaf and MUV. It has East Coast operations in Pennsylvania, New Jersey, Maryland and Massachusetts

Willow Brook Wellness has a dispensary in Meriden, and Caring Nature has a dispensary in Waterbury. Connecticut Pharmaceutical Solutions has a cultivation and production facility in Rocky Hill.

The Connecticut Pharmaceutical acquisition includes $113.25 million in voting shares and $18.5 million more in “subordinate voting shares of the company upon the first adult-use sale of cannabis in Connecticut,” according to a Verano news release.

The 216,532-square-foot facility is one of just four cannabis producers licensed in Connecticut, online records show. The medical program has enrolled about 54,000 patients.

“We are excited about the continued expansion of both our national platform and our East Coast hub. Entering the Connecticut market ahead of its adult-use transition provides a clear runway for sustainable, long-term growth,” George Archos, Verano founder and chief executive officer, said in a statement included in the news release.

It’s not the only large company drawn to Connecticut markets by talks of recreational legalization.

In March, multi-state cannabis company Greenrose Acquisition Corp announced that it would acquire Theraplant, one of the other production facilities in Connecticut.

“In emerging medical markets with recreational potential like Connecticut, where our company is generating strong cash flow, we are excited about this growth potential as the market evolves,” Mickey Harley, chief executive officer and director of Greenrose, said in a news release at the time.

Amid 2019 talks of recreational legalization, Chicago-based Green Thumb Industries announced its $80 million acquisition of Advanced Grow Labs in West Haven. Curaleaf, the state’s only other production facility, is headquartered in Massachusetts and operates businesses in 23 states.

Through the program, medical providers will be able to apply for hybrid licenses that allows them to sell both recreational and medical products. Existing dispensaries and production facilities will be able to apply for the hybrid licenses without being subject to the lottery process for new applicants.

They’ll have to submit plans for preserving the medical program as well as a workforce development plan for approval by Connecticut’s Social Equity Council. The council is charged with overseeing social equity measures designed to ensure funds from the adult-use program flow into communities most affected by the war on drugs.

Dispensaries’ conversion fees will be cut in half – from $1 million to $500,000 – for applicants who participate in at least one joint venture with an equity partner, according to documents from the state Department of Consumer Protection.

Requirements for production facilities that want to convert to an “expanded production” license to produce both adult-use and medical products are similar. They’ll have to submit a workforce development plan and a medical cannabis preservation plan.

The conversion fee is $3 million, and will halved if companies have at least two joint equity ventures. Production facilities will either have to pay $500,000 to the social equity council to convert or show evidence they have a social equity partner.

Licensees with medical licenses won’t be allowed to terminate their pharmaceutical programs through this process.