Massachusetts-based cannabis firm Curaleaf Holdings is on its way to becoming the largest weed business in America, following a new merger with the Chicago-based GR Companies, proprietor of the Grassroots Cannabis dispensary chain.
On Wednesday, Curaleaf announced it was acquiring GR Companies for $75 million in cash and $800 million in stock options. GR operates 20 cannabis dispensaries under the Grassroots name across the Midwest, and currently holds licenses allowing it to open 41 more locations.
“Today’s announcement is a testament to the hard work of the many employees that helped make Grassroots the leading cannabis company in the Midwest,” said Grassroots CEO Mitch Kahn in a statement, the Chicago Sun-Times reports. “This acquisition will enable us to give our patients and retail partners greater access to products that adhere to the highest standards of quality and reliability, and our employees the opportunity to be part of a best-in-class operator.”
Curaleaf currently operates in 12 states, and runs 45 dispensaries, but most of these are located on the East and West Coasts. The merger, which is expected to close early next year, will give the combined company access to Midwestern states like Michigan and Illinois. This move is particularly timely, as Illinois is set to become one of the country's largest recreational pot markets as soon as the state's new adult-use legalization law goes into effect on January 1st, 2020.
“If you think about the map and how complementary this transaction is, there is virtually no overlap,” Curaleaf chief executive Joe Lusardi said, according to Barron's.
Curaleaf has been buying up companies across the US in its bid to become the country's largest weed business. Last month, the company snatched up Cura Partners, owners of the Select brand of THC products, for $948 million in stock. And just a few weeks ago, Curaleaf bought two Arizona dispensaries for $25.5 million in cash and stock.
The acquisition of GR Companies will cement Curaleaf as the largest pot business in the US, with licenses to legally operate in 19 states. The combined company will hold 131 medical and adult-use dispensary licenses and a total of 20 cannabis cultivation sites. Curaleaf is now predicted to make around $900 million in sales next year, including the $350 million that Grassroots was already predicted to take in.
Following the announcement, Curaleaf's stock rose above $5 billion. But even though the company is on its way to becoming the largest pot business in the world, it trades at a disadvantage to its Canadian competitors. Federal law prevents businesses working with Schedule I drugs from trading on the US stock market, so Curaleaf has been forced to list on the Canadian Securities Exchange. US law allows Canadian canna-businesses to list on the US stock market, however, giving these companies a competitive advantage over the American cannabis industry.