M&A Frenzy: Parallel, Verano, and Ayr Wellness Strike Deals

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It was a busy week of dealmaking, as several top cannabis firms announced major deals in notable markets like Chicago, Pennsylvania and New Jersey.

Parallel Acquires 6 Windy City Locations

On Thursday, Florida-headquartered Parallel — which last month announced plans to go public in a $1.8 billion SPAC transaction — said it would acquire six Illinois dispensaries previously affiliated with Grassroots Cannabis in a $100 million deal.

Parallel has agreed pay $60 million in cash and $40 million in stock for the remaining Windy City Cannabis retail locations in Illinois, which are expected to generate $75 million in revenue this year.

Additional earnout agreements could bring the deal to $155 million, according to a news release.

Recall that Curaleaf, the world’s largest cannabis company, last year closed its $830 million acquisition of Grassroots Cannabis, whose co-founders separately owned a total of 16 Illinois dispensary licenses under the Greenhouse and Windy City Cannabis banners.

However, in order to comply with Illinois regulations that limit companies to owning 10 dispensaries, Curaleaf was forced to find a buyer for six of its licenses.

Under the terms of the deal announced Thursday, Parallel will acquire four existing dispensaries and two planned retail locations from a holding company led by Steve Weisman, CEO of Windy City and co-founder of Grassroots.

Parallel’s purchase of the remaining Windy City locations marks a homecoming of sorts for CEO William “Beau” Wrigley, heir to the namesake chewing gum enterprise.

"The acquisition of Windy City enables Parallel's entry into Illinois, one of the best performing cannabis markets in the U.S. to date,” Wrigley said via the release.

Upon closing, Parallel will become a key player in the $1.4 billion Illinois cannabis market, which is dominated by juggernauts like Curaleaf, Green Thumb Industries, Cresco Labs and Verano Holdings.

"We have been closely following the successful launch of adult use cannabis in Illinois since January 2020 and believe that Windy City has assembled a highly attractive footprint, including four dispensary locations in the greater Chicago region,” Wrigley added via the release.

The deal is expected to close in the second half of 2021, and Parallel intends to issue stock when its merger with Ceres Acquisition Corp. is complete.

“This transaction gives Parallel the chance to build upon Windy City's neighborhood retail brand presence to bring customers well-being through cannabis products,” Wrigley added. “We also intend to continue to have a positive impact in Windy City's local communities by creating jobs and investing in employees.”

Parallel currently operates 42 retail locations across three states — Florida, Massachusetts, and Nevada — and is planning to open additional stores in Texas and Pennsylvania this year.

The company expects to reach $447 million in net revenue and $102 million of adjusted EBITDA in 2021.

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Verano Holdings Buys in Expands in Ohio and Pennsylvania

Chicago-based Verano Holdings, which went public on the Canadian Securities Exchange under the ticker VRNO last month, this week announced plans to acquire additional assets in Ohio and Pennsylvania.

On Thursday, the company said it had struck a deal to buy Ohio’s Mad River Remedies, based in Dayton.

Specific financial terms were not disclosed, but the acquisition will bring Verano’s total dispensary count to five — the maximum allowed under state regulations.

“Ohio has developed into a core market for us, and we’re pleased to gain coverage of the substantial Dayton market through this agreement,” Verano co-founder and CEO George Archos said via a release.

According to the announcement, the purchase gives Verano access to a population of nearly 800,000.

“The dispensary is primely located just a few miles from the busy and beautiful downtown Dayton area, situated in the Riverside community, across the street from the National Museum of the US Air Force,” Archos continued. “Ohio’s burgeoning medical cannabis market continues to provide Verano with an exceptional opportunity to leverage our proven, vertically integrated model, allowing us to drive revenue growth while satisfying the considerable patient demand.”

That news came just one day after the cannabis firm, now ranked as one of the largest in the country following its acquisition of AltMed, said it would spend about $110 million to acquire Pennsylvania’s The Healing Group.

Under the terms of that deal, Verano will pay $55.1 million in cash and $55.1 million in stock for three dispensaries in the Pittsburgh-metro area.

“After going public last month, Pennsylvania quickly became a priority for targeted expansion, as it will be integral to our future growth plan,” Archos said. “Upon completion of this deal, pending all required approvals, we will measurably increase our retail footprint.

Last week, Verano entered into an agreement to acquire the right to manage Phoenix, Arizona’s “Local Joint” dispensary.

Under the terms of that transaction, valued at $17 million, Verano will pay current manager Flower Launch LLC. $13.5 million and issue $3.5 million in stock.

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Ayr Wellness Acquires in New Jersey

Ahead of adult-use cannabis sales in New Jersey, Ayr Wellness said Monday it would move forward with its previously announced acquisition of Garden State Dispensary (GSD), one of the 12 existing vertical license holders in the state.

According to a news release, GSD currently operates three dispensaries, employs 110 people and boasts the largest retail footprint in New Jersey.

Ayr wellness will pay $101 million for the business, including $41 million in cash, $30 million in stock and $30 million in promissory notes. Another $96.75 million in earnout payments is also up for grabs, according to the announcement.

“With its recent adoption of adult-use, New Jersey will be a leading force in the Northeast cannabis market,” Ayr CEO Jonathan Sandelman said via the release. “We look forward to serving the Garden State’s medical cannabis patients and working with the regulators to ensure a safe and robust rollout of the adult-use program.

The purchase will include GSD’s three dispensaries, as well as a cultivation and production facility that current spans 30,000 sq. ft. and is currently being expanded by 75,000 sq. ft.

“We see an incredible opportunity to drive growth at retail with the introduction of our quality cannabis brands, expanded product offerings and exceptional in-store experience,” Sandelman added. “Additionally, we see an excellent opportunity for wholesale growth given our planned cultivation expansion and past success at driving wholesale penetration in supply-constrained markets.

Ayr Wellness also closed the $17 million acquisition of Parma Wellness Center in Ohio, and the $1.15 million purchase of Ohio Medical Solutions, a processor previously owned by Vireo Health.

Earlier this month, Ayr closed its $75.4 million acquisition of Blue Camo LLC, which owns the vertically integrated “Oasis” operation in Arizona than includes three medical and adult-use dispensaries as well as two cultivation facilities.


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