Verano Holdings, LLC is buying and merging with Alternative Medical Enterprises, LLC, Plants of Ruskin, LLC, called AltMed to create the largest privately-owned cannabis company. The value of the transaction was not disclosed.
Verano is a multi-state operator located in 12 states, with 17 active retail locations and approximately 440,000 square feet across its cultivation facilities, The company is known for its portfolio of consumer brands: Encore, Avexia, and Verano. Verano designs, builds and operates inimitable Zen Leaf branded dispensaries.
AltMed is known for its MÜV brand of medical cannabis-infused products launched in Arizona in 2016. MÜV Dispensaries by AltMed Florida was formed a year later through the partnership of AltMed Enterprises and Plants of Ruskin, a multi-generational Florida agricultural leader. The company has 27 locations (one in Arizona muv-az.com, 26 in Florida muvfl.com, and more added each month).
“The combination of Verano and AltMed is a game-changer in the U.S. cannabis industry. It is expected to create one of the largest private cannabis companies with truly no redundancies in geography or operations. AltMed is an ideal partner to accelerate our shared vision to be one of the most innovative and profitable cannabis operators in the country. Our cultures are seamlessly aligned and we have a strong commitment to providing a superior, customer-focused cannabis experience across our existing markets. AltMed not only has a substantial market presence in Florida and Arizona, a state which recently approved recreational use, but also delivers a portfolio of high-quality, pharmaceutical-grade medical cannabis products,” said George Archos, Founder and CEO of Verano Holdings. “Together, we believe we have a very strong management team whose experience spans cannabis, pharma, real estate and hospitality, and we are very excited to welcome and work collectively with AltMed’s Michael Smullen, Bill Petron and John Tipton.”
The combined company will be led by the founder and CEO of Verano, George Archos, a veteran in the logistics and operations spaces who entered the cannabis industry in 2014. AltMed’s key personnel will maintain a strong presence on the management team and Board of Directors, including Michael Smullen, Alternative Medical Enterprises, LLC’s Chairman, CEO & Co-Founder, and John Tipton, a registered CPA with more than 30 years of leadership experience in both the agricultural and land development industries. In addition, Bill Petron of AltMed Arizona will bring his vast experience to the newly formed company.
Mr. Archos continued, “This combination will create significant opportunity to expand our business into limited-license markets and scale both our wholesale and retail operations. We have created a thoughtful model for long-term success and a solid platform to deliver what we expect to be industry-leading EBITDA margin on a pro forma basis. In addition, our combined strong balance sheet should provide us with financial flexibility to expand operations and go deeper in states in which we operate.”
Harvest Went Bust
Earlier this year Verano looked like it was going to be acquired by Harvest Health (OTC:HRVSF) in an all-stock deal valued at approximately $850 million based on a share price of C$8.79 ($6.70). The companies stated at the time of termination that prolonged obstacles in meeting requirements for state and local regulatory authorities needed to transfer ownership and operational licenses, adverse capital market conditions, a challenging environment for asset sales, all contributed significantly to the decision not to move forward with the pending acquisition. Harvest Health shares are now trading at C$2.41 ($1.84).
Profitable and Formidable
Verano says it has been profitable since it was founded. AltMed was founded in 2014 and said it has been profitable in recent years. AltMed has 220,000 square feet of cultivation facilities in Florida, and 30,000 square feet in Arizona, which is rapidly expanding by an additional 50,000 square feet to meet increased demand.
The combination will accelerate Verano’s expansion into Florida and Arizona, currently among the largest and fastest-growing cannabis markets in the United States. Following the consummation of the transaction, the combined group of companies will operate under the Verano name and will have the ability to operate in 14 states, with eight cultivation facilities and 44 active retail locations. Approximately 32 additional retail locations are planned.
“We share Verano’s enthusiasm for this transformative business combination. We have a mutual commitment to delivering a high-quality product through a superior customer experience to distinguish us in the marketplace,” said Michael Smullen, Chairman, CEO and Co-founder of AltMed’s Alternative Medical Enterprises, LLC. “We are both disciplined stewards of capital, run our businesses efficiently and are focused on delivering profitable growth. It was important for us to find the right strategic partner and Verano was the ideal choice.”
“Through our combination with Verano, we will have economies of scale to further expand our operations, bring adult-use programs online and scale cultivation and manufacturing capacity to meet market demand,” said John Tipton, CEO of AltMed Florida. “Both Verano and AltMed are uncompromisingly dedicated to superb cultivation and manufacturing processes, new product development and retail design and engagement. In combining with a multi-state operator, we have a larger platform to meet the growing needs of our customers and deliver long-term profitable growth for our stakeholders.”
The company said in a statement that the combination was expected to result in substantial benefits to AltMed and Verano, including the following reasons for the transaction.
- Establishes Verano as one of the three largest MSOs in the United States based on 2021 internal projections compared to current FactSet 2021 consensus estimates for revenue and EBITDA.
- Creates a scale market leader well-positioned for growth and accelerates expansion in the limited license, high-growth markets – specifically Florida and Arizona.
- Increases Verano’s reputation as a manufacturer of high-quality products on a large scale by adding similar capabilities in new states.
- Increases the combined company’s financial profile with industry-leading margins and profitability.