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April 28, 2022

Multistate operators keep buying up cannabis businesses nationally, including in CT

HBJ PHOTO | STEVE LASCHEVER Curaleaf employees monitor a harvest.
By Skyler Frazer

Multistate operators are increasingly buying up cannabis shops and other marijuana-related businesses across the country, including in Connecticut, as more states legalize recreational use of the drug.

Since 2016, the number of cannabis dispensaries purchased by multistate operators has increased nationally every year, according to data from Cannabiz Media. Cannabiz Media has been tracking cannabis and hemp licenses since 2015, compiling data on companies and transactions into its own “Cannabiz Intelligence” database.

The company recently published an analysis of how publicly-traded multistate operators were adding to their portfolios to determine the number of dispensaries that have been opened and which were bought.

Of the 8,904 cannabis companies in the U.S., 1,048, or almost 12%, are owned by public companies. Cannabiz Media found that 338 dispensaries changed hands over the past few years with 29 multistate, publicly-traded companies involved in the transactions.

The number of stores changing hands has increased every year since 2016, per data from Cannabiz Media. In 2021 there were 185 dispensaries that changed hands, up from 53 in the previous year. Already 44 have been bought and sold through three months in 2022.

While Connecticut’s recreational market isn’t even off the ground yet, companies with a presence in the state’s medical marijuana sector have been buying dispensaries both in and out of the state, according to Cannabiz Media’s acquisition data. Nine of the state’s 18 cannabis dispensaries have been purchased by public multistate operators since the medical program began.

Trulieve, which has 171 dispensaries in the country, purchased 54 of them, including The Healing Corner dispensary in Bristol back in 2019.

Chicago-based Verano Holdings Corp. purchased Willow Brook Wellness medical dispensary in Meriden in November and said it intends to also buy Waterbury dispensary Caring Nature. Per Cannabiz Media’s data, Verano purchased 22 of its 95 national dispensaries, almost a quarter of its total stores.

Massachusetts-based Curaleaf, which operates four medical dispensaries in Connecticut and a medical grow facility in Simsbury, purchased 15 of its 130 U.S. dispensaries. The company has one of the largest national cannabis footprints along with Trulieve.

Acreage Holdings, a New York multistate operator, owns three dispensaries in the state that it plans to rename under its “The Botanist” brand. The company has purchased 11 of its 31 national cannabis dispensaries, more than a third.

Dispensaries aren’t the only business type being bought up, though, and all of the state’s medical grow facilities are now owned by out-of-state companies.
    
In 2019, Chicago-based Green Thumb Industries announced its acquisition of Advanced Grow Labs, which owned a cultivation and production facility in West Haven. GTI also purchased the BluePoint Wellness dispensary in Branford and later opened another in Westport. The company has 73 such licenses in the country, of which it purchased 26 of them.

Theraplant, one of the state’s other medical growers with a facility in Watertown, was bought by New York-based Greenrose Holding Co. in March 2021.

Verano closed on an acquisition of Connecticut Pharmaceutical Solutions Inc. (CTPharma) in December. CTPharma has a cultivation and production facility in Rocky Hill as one of the state’s four licensed medical cannabis growers.

The multistate operator data from Cannabiz Media doesn’t include Fine Fettle, which is based in Connecticut but has recently entered the cannabis market in other states. Fine Fettle is privately held and also operates dispensaries in Massachusetts and was recently awarded a license in Georgia.

Most states with either medical or recreational cannabis programs have limits on the number of licensed stores, like Connecticut’s municipality population guidelines about how many stores a town or city can host.

Ed Keating, co-founder of Cannabiz Media, explained that these limited license markets are more attractive to multistate operators because they’re more predictable and regulated. As such, more stores have been acquired in these limited license states than in unlimited license states.

“States put these (limits) in for various reasons, but it's a way to essentially manage the industry pretty tightly,” Keating said. “The downside is it can create an oligopoly or an oligopolistic situation where you have a handful of undifferentiated providers who can carve up the market and that's one of the reasons why they’ve been attractive (merger and acquisition) targets.”

The idea of multistate operators coming to Connecticut isn’t new.

Some advocates have concerns about these large companies having an oversized footprint in Connecticut’s legal cannabis market.

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