Cannabis is booming, and consolidation is coming. Yesterday, Arizona-based Harvest Health & Recreation, a publicly traded company with dispensaries in many legalized states, acquired Verano Holdings, a Chicago-based operator and grower of Cannabis, for $850 million.
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The deal marks a milestone for cannabis that’s gone capitalist. It is one of the largest known consolidations of marijuana companies in the United States, giving Harvest Health “the right to operate up to 200 facilities across 16 states and territories,” according to Seeking Alpha.
The deal is also notable for the potential impact it could have on private startups. Venture capitalists are notoriously motivated to disrupt the status quo, often flouting regulations in pursuit of growth. Yet cannabis startup investment has remained mostly muted due to its status as an illegal federal substance. However, as the narrative and laws around cannabis usage and distribution changes, the potential for returns is likely to become more attractive.
Verano, according to Crunchbase, raised a $120 million corporate round last October, likely returning a significant sum to its known investors Sol Global investments and Serruya Private Equity in its sell to Harvest Health.
The deal marks at least the third large cannabis-related deal since the start of 2019. Last month, we reported on marijuana producer and distributor Flow Kana closing on a $125 million Series B in what was touted as the largest private funding round for a U.S.-based cannabis company. In January, San Jose, Calif.-based Caliva announced it had raised $75 million in an “oversubscribed” financing that included participation from Carol Bartz, former CEO of Yahoo and Autodesk, and three-time Super Bowl MVP and Pro-Football Hall of Famer Joe Montana.
Illustration: Li-Anne Dias