Given that the U.S. marijuana market could dwarf Canada's, perhaps it's no surprise that the most aggressive acquisition and merger activity can be seen among vertically integrated cannabis dispensary operators. By vertically integrated, I mean a company that completely controls its supply chain, including growing and processing marijuana within the state(s) that it's also retailing the product. Since cannabis can't be transported across state lines, per federal law, this vertical integration is a means of keeping costs down while controlling production quality.
The action was prompted by what officials called “blatant misrepresentation” in a statement issued by Harvest Health & Recreation, which announced Tuesday that it is acquiring a Pennsylvania weed company.
Harvest claimed that its multimillion dollar deal to acquire CannaPharmacy would make it one of the biggest marijuana companies in the nation. As part of the deal, Harvest said it would gain ownership of a marijuana growing operation in Reading. In addition, the company claimed it owned rights to open a total of 21 retail marijuana dispensaries.
An Arizona-based vertically integrated cannabis company is bringing its $500 million war chest and rolling up marijuana dispensaries and grow/manufacture operations on the East Coast with an agreement to acquire a local company with marijuana licenses in Delaware, Maryland, New Jersey and Pennsylvania.
Arizona-based Harvest Health & Recreation reached a binding agreement to acquire Verano Holdings of Chicago for $850 million, a deal that’s considered to be the largest acquisition inked in the U.S. cannabis industry to date.
The deal surpasses the previously largest U.S. acquisition in the cannabis industry – MedMen’s $682 million all-stock purchase of PharmaCann in October.
Upon closing, the all-stock deal with Verano will give Harvest one of the largest footprints among multistate cannabis operators with 123 dispensaries in 16 states.