The dealmaking frenzy in the marijuana business continues, with Chicago-based Grassroots Cannabis being sold to Curaleaf for $875 million.
Grassroots raised $90 million earlier this year. It’s one of several Chicago companies that won or bought licenses in multiple states as marijuana legalization picked up steam in recent years. It has more than 400 employees and operates in Illinois, Nevada, Pennsylvania, Michigan, Maryland, Oklahoma, Ohio, Vermont, North Dakota, Arkansas and Connecticut.
Curaleaf, which employs 1,300, operates in 12 states. It says the deal to buy Grassroots will make it the largest medical and adult-use cannabis company.
Curaleaf, based in Wakefield, Mass., is paying $75 million in cash and the rest in stock. Grassroots CEO Mitch Kahn said he’ll be on the board and will continue to run the Grassroots operations. Matt Darin, chief operating officer, and Steve Weisman, chief strategy officer, also will remain with the company. Kahn says he doesn’t expect any job losses related to the deal.
There’s little overlap between the companies. The acquisition will give Curaleaf a presence in Illinois, where the cannabis market will expand dramatically when recreational marijuana use becomes legal Jan. 1.
“Illinois being one of the biggest states in the country excites us,” said Curaleaf CEO Joe Lusardi.
As the sixth-largest state, Illinois is one of the biggest potential recreational-use markets, along with Curaleaf's home state of Massachusetts. But the Illinois recreational-use legislation favors existing operators, who get first shot at cultivation and dispensary licenses.
The cannabis industry has been in consolidation mode for a couple of years, and several Chicago-based companies emerged as large players. One by one, they've either gone public in Canada and continued to grow or sold.
“As CEO, my job is to create value for our shareholders,” Kahn said today. “From the day we started the business, we continued to look at opportunities.”
Grassroots was one of the last large Chicago-based cannabis companies to make a deal. Green Thumb Industries went public on the Canadian Securities Exchange a year ago, and Cresco Labs went public in December.
Illinois-based PharmaCann sold to MedMen for $682 million in stock. Chicago-based Verano Holdings is being acquired by Phoenix-based Harvest Health & Recreation for $850 million in stock.