By Arthur Villasanta
Arizona-based firm Harvest Health and Recreation will buy competitor Verano Holdings for $850 million in an all-stock deal that will make the former the largest cannabis firm in the U.S.
U.S. cannabis firms are merging and acquiring to better compete against their much larger Canadian rivals led by Canopy Growth Corporation, the world’s largest cannabis firm. Canopy Growth, which produces medical cannabis, posted revenues of US$30 million in 2017.
Combined, Harvest Health and Verano will be one of the largest multi-state operators in the USA, owning more than 200 cannabis producing facilities in 16 states. Harvest Health operates in nine states: Arizona, California, Florida, Maryland, Ohio, Pennsylvania, Massachusetts, Michigan and North Dakota. The latter three will open soon.
The Verano acquisition will add Illinois and Nevada to that list. Verano also has plans for new locations in Puerto Rico, Oklahoma and New Jersey.
Founded only in 2013 by Steve White, a lawyer by profession, Harvest Health has a clear vision of how Verano will bolster Harvest’s positioning in the nascent U.S. pot industry. White says Harvest Health’s cannabis-based products empower users to regain control over their health and wellness. But the company needs to grow, much like its cannabis plant.
“We plan on ... developing the largest retail footprint, the largest retail platform, in the United States, and with this acquisition, I think we’ve done that,” said White to CNBC.
White said the company is going to do every single deal that makes sense for it and company shareholders. He pointed out that it is important for Harvest to grow faster than its competitors, and this means the company will do everything it possibly can to deliver on that.
White said one of the things Harvest Health has been really good at is acquiring licenses when they’re actually allocated by the government. According to him this means Harvest doesn’t have to go out and buy licenses for tens of millions of dollars when it can acquire them for a few hundred thousand dollars, which is possible by acquiring a rival.
“What we’ve seen in Verano is they also have the ability to do that very same thing,” he said. “What very few people know is they won more licenses than anyone in the state of Nevada in the recent round of license awards there.”
Canadians smokes marijuana with a bong in Vancouver, British Columbia, Canada. Recreational became legal in Canada as of October 17. Photo: Jeff Vinnick/Getty Images
White was also impressed with Verano’s focus on profitability, which to him means they’d work well together. He said Verano has been running a profitable company for quite some time, which “is quite unique” in the U.S. cannabis industry.
“There’s only a few companies that actually run profitably. So, in this case, you’ve just combined two of them, so there’s one less.”
As more and more states pave the way for a legal marijuana market to come to fruition, White suggested that Harvest’s name wouldn’t stay out of the headlines for long.