eResearch | On July 17, 2019, Curaleaf Holdings Inc. (OTC: CURLF; CNSX: CURA; “Curaleaf”) announced a US$875 million acquisition of GR Companies, Inc (“Grassroots”), a United States (U.S.) cannabis cultivator and retailer that will expand Curaleaf’s operations to 19 states in the U.S. from 12, which includes Illinois, the most recent state to legalize cannabis recreationally. The acquisition combines the largest public and the largest private multi-state operators in the U.S., which together will now operate 131 dispensary licenses, 68 operational locations, and 20 cultivation sites. Once the deal closes in early 2020, Curaleaf will be the largest cannabis company in both recreational and medical markets by revenue, with access to approximately 177 million people.
Curaleaf’s strategy is to grow in the U.S. cannabis market by acquisition, so that it can scale quickly and create a brand that is accessible across all of the U.S. The Company has been a serial acquirer with more than 12 announced acquisitions in 2017 and 2018, including a range of companies that have dispensaries, production sites, and processing facilities. This acquisition trend has continued throughout 2019, as Curaleaf completed multiple acquisitions to expand their footprint in Arizona, California, Nevada, and Ohio.
Prior to the GrassRoot deal, the most noted acquisition was when Curaleaf announced in May its entrance into the cannabis oils market through a US$948.8 million acquisition of Cura Partner Inc’s “Select” brand, which provided the company with the largest cannabis wholesaler in the U.S. with manufacturing, processing, distribution, marketing, and retailing operations. The acquisition diversified and expanded Curaleaf’s operations to the U.S. Western regions, including California, Arizona, Oregon, and Nevada. This was a significant acquisition to the Company’s operations as Select had US$117 million in revenue in 2018, which when added to Curaleaf’s existing revenue of US$77 million would more than double the Company’s revenue.
According to Viridian Capital Advisors, in 2019, more than 200 deals have been made so far within the cannabis sector, as industry leaders are competing for market share as more countries legalize cannabis. Curaleaf’s acquisition prepares the Company to compete with Canopy Growth Corp. (NYSE: CGC; TSX: WEED; LSE: 0UO9; DB:11L1) when Canopy closes its US$3.4 billion acquisition of Acreage Holdings Inc. (OTC: ACRGF; CNSX: ACRG; DB: 0VZ), contracted to be implemented once the U.S. federally legalizes recreational cannabis.
Curaleaf’s stock jumped 17% to US$7.60 after announcing the deal. As the largest cannabis company in the world by revenue, will Curaleaf be able to maintain quality of products and services as it consolidates and synergizes operations? Only time will tell.
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Curaleaf Holdings Inc. (OTC: CURLF CNSX: CURA)
Headquartered in British Columbia, Canada, Curaleaf, formally Lead Ventures Inc., is a vertically integrated multi-state cannabis company managed by pharmaceutical and medical professionals with decades in experience. It has recently experienced high growth in brand recognition across the United States as it has completed numerous acquisitions to expand its product reach. CURA is currently trading at C$9.95 per share with a C$3.39 billion market capitalization.
Canopy Growth Corp. (NYSE: CGC; TSX: WEED; LSE: 0UO9; DB:11L1)
Headquartered in Ontario, Canada, Canopy Growth Corp. is the world’s largest cannabis company, based on market capitalization. Canopy was the first to export cannabis to Germany, the first to make a partnership with a global beverage company, and the first to have an agreement to acquire a U.S. based cannabis company. WEED is currently trading at C$47.69 per share with a C$16.49 billion market capitalization
Acreage Holdings Inc. (OTC: ACRGF; CNSX: ACRG; DB: 0VZ)
Headquartered in New York, United States, Acreage Holdings, formally known as High Street Capital Partners, is a diversified cannabis company that has a presence in 20 states. On April 2019, Canopy Growth Corp. announced that it had acquired the right to acquire Acreage Holdings for US$3.4 billion, contingent on the U.S. federally legalizing recreational cannabis. ACRG is currently trading at US$15 per share with a market capitalization of US$931.6 million.
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