Providing Verano Entrance into the Virginia Market Ahead of Adult Use Program Launch and Deeper Footprint in Arizona
CHICAGO, July 29, 2024 (GLOBE NEWSWIRE) — Verano Holdings Corp. (Cboe CA: VRNO) (OTCQX: VRNOF) (“Verano” or the “Company”), a leading multi-state cannabis company, today announced that it has entered into agreements to acquire all of the ownership interests of three subsidiaries of The Cannabist Company Holdings Inc. (Cboe CA: CBST) (OTCQX: CBSTF) (“The Cannabist Company”), one of the most experienced cultivators, manufacturers and retailers of cannabis products in the U.S. Two subsidiaries, 203 Organix, L.L.C. and Salubrious Wellness Center, Inc. (together, the “Arizona Operations”) operate in Arizona, and the third subsidiary, Columbia Care Eastern Virginia LLC, operates in Virginia (the “Virginia Operations”).
Deal Highlights
- The Virginia Operations include one cultivation and production facility and six dispensaries.
- Virginia’s cannabis program is uniquely and attractively structured in that the Commonwealth is split into five Health Service Areas (HSAs) with only one cannabis operator and retailer permitted to service each HSA.
- Verano will become the sole cannabis operator and retailer for HSA 5 in Eastern Virginia.
- HSA 5 is home to nearly two million residents, serving populated areas such as Virginia Beach, Chesapeake, and Norfolk.
- Virginia’s legal cannabis program permits home delivery throughout the Commonwealth as well as wholesale opportunities to other HSAs, providing Verano the ability to serve patients statewide.
- Total consideration for the Virginia Operation, subject to adjustment, is $90 million. Upon Closing, Verano will pay closing consideration of $20 million in cash, $40 million in Class A subordinate voting shares, and issue a $30 million promissory note.
- The Arizona Operations include one cultivation facility, one production facility, and two dispensaries.
- Verano’s total Arizona cultivation footprint will expand to 90,000 square feet across three facilities.
- Verano will operate eight dispensaries in Arizona adding one in Tempe and one in Prescott.
- Total consideration for the Arizona Operations is $15 million, payable in cash.
- Once closed, the acquisitions will bring Verano’s geographic footprint to 14 states, 15 cultivation and production facilities, and 150 dispensaries.
The Cannabist Company will maintain its Virginia operations in the Richmond region (HSA 4), with approximately 80,000 square feet of cultivation and manufacturing capacity, five retail locations in operation and one in development. Upon exit of the Arizona market, the Cannabist Company’s operational footprint will be in 13 markets, including previously announced divestitures that are subject to future closing.
Verano Management Commentary
“Today’s agreement further diversifies Verano’s portfolio, which, since the company’s inception, has remained focused on expanding our business into limited-license markets to scale both our wholesale and retail operations,” said George Archos, Verano Chairman and Chief Executive Officer. “This opportunity greatly increases Verano’s growth trajectory as we gain access to the coveted market of Virginia ahead of an adult use program and deepens our footprint in Arizona. With Virginia, we will be in a prime position to once again take advantage of the extraordinary growth that is expected to come with an adult use program launch.”
The Cannabist Company Management Commentary
“We are pleased to have reached an agreement and look forward to welcoming Verano to the robust Virginia market. As mentioned in previous announcements, we are continuing to optimize our footprint as we target building a better business, which includes deleveraging our balance sheet. We will retain our five existing retail locations in the Richmond, Virginia area, with one additional location in development, as well as our cultivation and manufacturing facility. We are so proud of what our Eastern Virginia and Arizona teams have accomplished and look forward to seeing the Verano team support their continued successes,” said David Hart, CEO of The Cannabist Company.
Closing of the acquisitions pursuant to the acquisition agreements for the Arizona Operations and the Virginia Operations are each subject to closing conditions, including approval of applicable regulatory bodies.
