One of the U.S.’ top vertically integrated cannabis operators is expanding into another major market.
Curaleaf Holdings Inc (CSE: CURA) announced today that they had signed an agreement to acquire Ohio Grown Therapies, a medical cannabis processing company which was awarded cultivation and processing licenses by the state back in 2018.
The overall transaction, while only valued at a relatively modest $20 million, essentially gives Curaleaf back door access to the Ohio medical cannabis market and follows another major acquisition announcement made by the company earlier this month.
Ohio Grown Therapies is currently building a 32,000 square foot cultivation facility in Johnstown, where upon completion, will be split off into a two-tier cultivation system and separate processing area.
The deal would give Curaleaf the option to purchase Ohio Grown Therapies down the road for $20 as well as leasing the facility. Overall, the transaction is expected to pass regulatory approval sometime in the second half of 2019.
“Curaleaf’s expansion into Ohio is another step in our goal to be the most accessible cannabis company in the country, providing patients with high-quality, reliable products. This transaction is reflective of our strategy to become vertically integrated with a focus on limited license markets,” said Joseph Lusardi, CEO of Curaleaf. “As the seventh most populous state in the country, Ohio is an emerging cannabis market with strong growth potential and we plan to continue pursuing opportunities that increase our exposure to this expanding customer base.”
While an important announcement, the news pales in comparison to Curaleaf’s earlier statement made this month, where they announced they would acquire Cura Partners for a whopping $948.8 million all-stock transaction.
Cura Partners owns the well known Select cannabis wholesale brand, which is currently available in over 900 retailers across the country. It’s also one of the top brands in California, Arizona, Nevada, and Oregon, effectively opening up the east coast to Curaleaf.
Management went on to justify the purchase by saying that, while the $950 million price tag might seem steep, the most important thing is that it opens the door to markets that otherwise wouldn’t be as accessible otherwise for Curaleaf. For most cannabis companies looking to expand, it’s easier to purchase an existing business that already has licenses than to try to force themselves into the markets on their own. With regulatory approval for some states taking months to acquire, and in many cases not giving out any more licenses at all, multi-state operators like Curaleaf have been hunting for new acquisition opportunities.
At the moment, Curaleaf operates in 12 separate states and has an asset portfolio of 44 dispensaries, 12 cultivation sites, and 11 processing facilities, and both acquisitions would see their overall retail presence expand greatly.
Shares of Curaleaf inched upwards slightly in reaction to the news, edging out a 2.6 percent gain in Monday’s trading session. Sitting currently at a $4.98 billion market cap, Curaleaf didn’t decline too much during Q4 2018 when most cannabis stocks were falling. Currently at a price of C$14.82 per share, Curaleaf has been trading at record highs over the past couple of weeks.