Marijuana stocks were down Thursday after retailer and cultivator MedMen agreed to buy medical cannabis provider PharmaCann in a $682 million deal that creates the biggest U.S. weed company.
The combined company will have licenses in 12 U.S. states that will allow it to operate 79 cannabis facilities. The all-stock transaction is the latest case of merger munchies, with the marijuana industry seeing a spate of deals both in Canada, where recreational use becomes legal next week, and the U.S.
MedMen CEO Adam Bierman touted the revenue synergies he believes the PharmaCann deal will produce. He also claimed the agreements shows how far the marijuana industry has come in the U.S.
“This is a transformative acquisition that will create the largest U.S. cannabis company in the world’s largest cannabis market,” he said in a news release. “The transaction adds tremendous scale to our vertically integrated business model by expanding our U.S. retail footprint across important growth markets while strengthening our cultivation and production capabilities.”
Marijuana Stocks On Pace For Down Week
Dubbed the Apple Store Of Weed due to its trendy retail outlets, L.A.-based MedMen began trading on the Canadian Securities Exchange in May.
Among marijuana stocks trading in the U.S., Tilray (TLRY) was down 3.55% on the stock market today and is headed for its first weekly loss since its July IPO. Canopy Growth (CGC) fell 1.5% Thursday and Cronos Group (CRON) sold off 5.7%. Both are also on pace for down weeks.
For now, MedMen hasn’t disclosed a plan to list on a U.S. exchange, as marijuana is still illegal in the U.S. on a federal level. But more Canadian companies, including Aurora Cannabis and Aleafia Health, are set to join the expanding tally of U.S.-listed marijuana stocks.
Meanwhile, MedMen has extended its reach into Canada via a joint-venture agreement with Cronos.
MedMen currently operates 14 retail stores in California, Nevada and New York. It also recently acquired a license to open and operate 30 retail stores in Florida. The firm has cultivation and production facilities in Nevada and New York. It is building facilities in Desert Hot Springs, Calif., and outside Orlando, Fla.
In addition, MedMen has agreements to acquire an operating retail store in Illinois, cultivation and retail operations in Arizona, and an additional nonoperating retail license in California.
PharmaCann currently operates 10 retail stores and three cultivation and production facilities across multiple states, including New York, Maryland and Massachusetts. In Illinois it is the largest holder of medical cannabis licenses. It is licensed for 18 retail stores in eight states and eight cultivation and production facilities in seven states.
MedMen Weeds Out Deals
It has been a big week so far for MedMen. On Wednesday it announced that it’s acquiring its first dispensary in the San Francisco Bay Area. It will be located in Emeryville, in the East Bay near Oakland.
And on Tuesday the company said it had hired Ben Cook as its new chief operating officer. He has 15 years of logistics experience working for the likes of Sam’s Club, Target (TGT) and Apple(AAPL).
And last month MadMen reached a deal with Canadian investors to raise $57 million in financing. It also snapped up “prime retail locations” in Florida. Under the so-called “bought deal,” Canadian investment companies agreed to buy around 13.6 million units of MedMen. The agreed price is 5.50 Canadian dollars ($4.17).
In a bought deal, an investment bank agrees to purchase a company’s entire offering. MedMen said it will use the money to add more retail locations to “attractive” cannabis markets. It will also build out its cultivation and production resources.
MedMen gave underwriters an option to buy up to an extra 15% of the units at that price. If exercised in full, MedMen would raise 11.25 million Canadian dollars extra, or around $8.5 million.
Credit: www.investors.com
