Verano Holdings’ (OTC: VRNOF) breakup with Goodness Growth looks like it’s going to be messy and expensive.
Chicago-based marijuana company Verano called off its planned $413 million purchase of Goodness Growth on Oct. 13, citing unspecified breaches of “covenants and representations.”
Goodness says Verano tried to back out of their deal without justification. Goodness Growth sued Verano in Canada, where both companies’ stocks are listed because cannabis remains federally illegal in the U.S. Goodness is seeking unspecified damages.
In late January, Verano announced the all-stock deal to buy Minneapolis-based Goodness Growth, which has licenses in New York and Minnesota. The two markets were seen as attractive additions for Verano, which, like its Chicago peers Cresco Labs and Green Thumb Industries, is among the biggest publicly traded U.S. marijuana companies and operates in multiple states.
Goodness Growth is a relative small fry, with a market value of just over $100 million before the announcement that its deal with Verano was off, which chopped the stock price by 60%. Verano has a market value of $1.7 billion.
Soon after the deal was announced, Verano got caught in a downdraft among marijuana stocks that was roughly twice as bad as the 25% selloff in the broader market.
“Verano began raising issues and taking positions suggesting it had buyer’s remorse,” Goodness Growth says in its lawsuit, adding that Verano tried to renegotiate the price or abandon the deal.
Verano declined to comment on the suit.