Verano Buys Goodness Growth In Deal Valued At $413 Million

This story is republished from Crain’s Chicago and written by John Pletz.

Verano (OTC: VRNOF), one of Chicago’s big cannabis companies, is moving into the coveted New York market with a large acquisition.

In an all-stock deal valued at $413 million, Chicago-based Verano is buying Goodness Growth Holdings, which has 18 dispensaries, five cultivation centers and a research and development facility.

The deal gives Verano access to New York, one the nation’s largest potential markets, which is poised to allow recreational marijuana sales next year. Chicago rivals Green Thumb Industries, Cresco Labs and PharmaCann already are in New York, where acquisitions offer a key advantage: Only existing medical-marijuana license holders can be vertically integrated, operating both cultivation and retail facilities.

“We have always viewed New York as a strategic market to solidify our existing east coast presence, particularly ahead of the state’s adult-use rollout, as we further expand the Verano platform and exceed a milestone of operating more than 100 dispensaries across the country,” said George Archos, Verano Founder and Chief Executive Officer. “Adding the New York, Minnesota and New Mexico markets to our portfolio, with full vertical integration, provides Verano with a solid foundation for future growth. We’re excited to welcome new colleagues to the Verano family and look forward to serving patients and consumers in communities across these great states.”

Goodness Growth also operates eight dispensaries in Minnesota, which is expanding its medical-marijuana program to include smokable products and edibles. GTI recently acquired LeafLine Industries.

“After an extensive evaluation process, George and the Verano team are unquestionably the ideal partners to take our business to the next level,” said Goodness Chairman and Chief Executive Officer, Kyle Kingsley, M.D. “Evidenced by their strong leadership team, sound operating principles, core values, and sustained growth, Verano continues to reach new heights as one of the top multi-state cannabis operators. We are confident in Verano’s ability to foster future growth opportunities for our employees and deliver an exceptional experience for our patients and consumers.”

Verano’s ability to pull off an all-stock deal is surprising, given that marijuana stocks have been pounded. Verano’s stock was trading at about $10.50 per share, near its IPO price a year ago. The stock is down by one-third in the past six months, and its peers are off 30% to 40%.

Verano has 93 dispensaries and 12 cultivation and production facilities in 15 states. With the acquisition, it will add New York, Minnesota and New Mexico and grow to 17 cultivation facilities and 111 dispensaries. The company estimates the new markets will generate nearly $14 billion in revenue between now and 2026.

Verano, which got its start in the Illinois market, has been an aggressive deal maker, completing 16 acquisitions since it went public last year. It moved into Pennsylvania, a strong market for medical marijuana that’s expected to allow recreational use soon, as well as Arizona, which began recreational sales last year.

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