Cannabis Giant Acreage to take $80-$100 Million Charge as it Abandons Markets
Multistate marijuana operator Acreage Holdings on Monday said it is still reducing overhead costs – including the sale of a North Dakota medical cannabis operation and undeveloped real estate in Nantucket, Massachusetts – as it seeks to improve its financial situation.
The New York-based company said in a news release that it expects to take a pretax, noncash charge of $80 million-$100 million in the quarter ending March 31, 2020, based on planned operational changes.
Acreage did not disclose details about the reductions.
“Cuts to overhead costs aren’t related to jobs at this time,” Howard Schacter, vice president of communications, wrote in an email to Marijuana Business Daily.
The news comes on the heels of an April announcement that the company furloughed 122 workers, scrapped a Nevada acquisition and temporarily closed facilities in several states, including the MMJ dispensary in North Dakota.
The 122 employees remain on furlough, Schacter wrote.
Acreage said the moves are part of the company’s strategic plan to generate a positive EBITDA (earnings before interest, taxes, depreciation and amortization) for 2020, excluding one-time transactions, by focusing on its most profitable operations.
Pure Dakota Health purchased Acreage’s operation in North Dakota, according to Schacter. He said the price isn’t being disclosed.
In its news release, Acreage referred to an anticipated “continued historic pressure on consumer sentiments and regional and national economic uncertainties.”
“The impact of the COVID-19 pandemic on U.S. cannabis operators has been profound, at a time when the industry was already reeling from decreased access to capital, legislative uncertainty and the illicit-market vaping crisis that struck our industry by association,” Acreage CEO and Chair Kevin Murphy said in a statement.
Acreage trades on the Canadian Securities Exchange as ACRG.U and on the over-the-counter markets as ACRGF.
In April 2019, Acreage entered a $3.4 billion deal to sell to the once high-flying Canadian marijuana company Canopy Growth.
But the deal was contingent on the U.S. government legalizing the sale of marijuana, and the financial situations for both Acreage and Canopy Growth have changed dramatically since then.