Deep Dive: Cannabis Consolidation Continues

Image: New Cannabis Ventures

Earlier this month, it was announced that Verano Holdings would be acquiring Goodness Growth for $413 Million in Stock.

That acquisition was notable for its price tag, but also because of the expanded reach it would give Verano Holdings, as explained below

Verano’s footprint will span 18 states, with active operations in 15, including 17 cultivation facilities totaling 1.3 million square feet of cultivation capacity and 111 active dispensaries

This acquisition was the latest in a string of a more focused acquisition trend for large cannabis companies.

In prior years, there was a speculative nature to acquistions, in which large money forces would acquire licenses in emerging markets and build them out, often to mixed financial and market share results.

More recently, large operators are taking the tact of acquiring companies in emerging markets that have already demonstrated ability to succeed in those markets.

Three examples of this trend are outlined below:

1: Curaleaf purchases Bloom, entrenching its Arizona dispensary business, & Los Sueños, solidifying Colorado production capabilities

2: Trulieve purchases Harvest, expanding its "hub" strategy from Florida to Pennslyvania

3: Green Thumb Industries (GTI) Enters Minnesota, Rhode Island, and Virginia via New Acquisitions

What's Next:

Clearly, large Multi State Operators, or MSOs, are deploying similiar strategies to build footprints in emerging markets with companies that have already built a following and shown expertise in navigating state-specific regulatory compliance.

This strategy also means that local brands stay local, but with the added firepower of large MSO ownership. The average customer likely won't even notice the large scale consoliation occuring within their state.

However, this strategy has its limitations. It is being deployed in eastern and midwest states in markets which do not limit the ownership of licenses the way west coast markets do.

This means that the west coast may operate in a unique world where multiple competing companies compete for the local customer. This should be a positive thing for customers, who will enjoy lower prices, more variety, and more unique innovations from a more competitive marketplace while the marketplaces themselves retain some semblance of local flavor that the East Coast and Midwest markets may lack.

Read More: Consolidation of Cannabis Contineus [NEW CANNABIS VENTURES]