Acreage Buys New Jersey's Compassionate Care For Undisclosed Amount

Acreage Holdings, Inc. (“Acreage”) (CSE: ACRG.U) (OTC: ACRGF) is buying New Jersey’s  Compassionate Care Foundation, Inc. which is a vertically integrated cannabis nonprofit corporation. The deal is subject to state approval and the amount of the deal was not disclosed. However, the state of New Jersey did state that Compassionate Care reported $4.9 million in revenue in 2018, badly trailing Curaleaf’s $19 million in revenue for 2018.

“I’m thrilled to finally welcome CCF into the Acreage family,” said Kevin Murphy, Chairman and Chief Executive Officer of Acreage.  “This reorganization will result in increased access to affordable medical cannabis for New Jersey’s existing patients in short order.  Moreover, we have long believed that upon adult-use legalization, the New England and Mid-Atlantic regions will be the preeminent cannabis market in the U.S. and Acreage is best positioned of any U.S. cannabis company to benefit.”

New Jersey Needs More Dispensaries

The Biennial Report issued in April 2019 from the state of New Jersey said, “The Department estimates that in 3 years New Jersey will need between 440,000 and 1,000,000 square feet of licensed cultivation capacity to meet
growing demand – or between 25 and 50 cultivation sites, depending on average size of site.” It went on to say, ” In New Jersey, there are 1.5 million people per open dispensary, whereas the aggregate average of population per dispensary in other states was roughly 100,000 people per dispensary. If New Jersey was at the average, the state would have 90 medical dispensaries to serve our population. Conclusion: The analysis strongly supports the need for additional dispensary sites in New Jersey.”

The report also noted that in both 2017 and 2018, Compassionate Care Foundation had the highest medical cannabis discounts, with discounts averaging between 16% and 17% per ounce.

CCF Assets

According to the company statement, Compassionate Care has licenses for cultivation, manufacturing & processing, and three retail dispensaries.

Cultivation: CCF operates one of New Jersey’s largest indoor growing facilities, primarily for high end flower, in Egg Harbor, NJ.  Acreage and CCF are planning to expand this facility to serve the existing demand for medical cannabis and in anticipation of adult-use legalization, and to build out a robust wholesale business.

Retail Dispensary Operations: CCF has the potential to operate three retail dispensaries, one of which is currently in operation in Egg Harbor.  An additional dispensary is under construction in Atlantic City as The Botanist, and an letter of intent has been signed for another The Botanist dispensary in Williamstown, NJ.

CCF Trails Competition

The Biennial report also stated that when looking at total inventory, neither Greenleaf Compassion Center nor Compassionate Care Foundation eclipsed 200 lbs of total product from June to December of 2018. “During the study period, Compassionate Care Foundation had a range of between 12 and 102 lbs of product onhand and an average of 41 lbs, while Greenleaf had a range between 5 and 12 lbs of product on hand and an average of 8 lbs on-hand.
Every other ATC in New Jersey had an average inventory of close to or over 500 lbs during same time period.”

 

Debra Borchardt

Debra BorchardtDebra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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