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Verano Holdings Corp. said Tuesday it would expand its legal cannabis footprint into New York State, New Mexico and Minnesota through a $413 million all-stock acquisition of Goodness Growth Holdings Inc.
The deal sent shares of Minneapolis-based Goodness Growth
GDNS,
GDNSF,
up 33% in afternoon trading. Verano’s stock
VRNOF,
VRNO,
rose 1.7%.
Verano won a competitive process for Goodness Growth Holdings, a spokesperson for the company told MarketWatch.
The deal will grow Verano’s business to 18 states including 17 cultivation facilities and 111 dispensaries, up from its current footprint of in 15 states, with 93 dispensaries and 12 cultivation and production facilities.
The acquisition of Goodness Growth ranks as Verano’s second-largest after its purchase of Alternative Medical Enterprises LLC as part of its initial public offering in February, 2021, the company spokesperson said.
The deal will give Verano entry into the large adult-use market developing in New York State, in addition to existing dispensaries in New Mexico and Minnesota.
“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 Verano founder and CEO George Archos.
Under terms of the deal, each holder of Goodness subordinate voting shares will receive 0.22652 of a Verano Class A subordinate voting share for each Goodness subordinate voting share held. Holders of Goodness super voting shares will receive 22.652 Verano Shares for each Goodness multiple voting share and Goodness super voting share held, respectively.
Goodness Growth chairman and CEO Kyle Kingsley said Verano and its CEO are “unquestionably the ideal partners” to take its business to the next level.
In New York, Verano will acquire one of 10 vertically-integrated licenses to grow and dispense medical cannabis products in the state, amid strong interest in a market expected to generate billions in sales.
See: MedMen backs out of New York deal with Ascend Wellness as Empire State market heats up
Goodness Growth ‘s New York business includes four medical dispensaries under the Vireo Health brand in Albany, Johnson City, Queens and White Plains.
Goodness Growth holds the rights to open four more dispensaries ahead of the commencement of New York’s adult-use program, which will allows for three of its total of eight dispensaries to sell recreational-use products.
Goodness Growth also operates home-delivery services in New York City, Westchester, Rockland, Nassau and Suffolk Counties. The company also owns a 64,204 square foot greenhouse cultivation and processing facility in Johnstown, and is in the process of expanding this facility.
Prior to Tuesday’s trades, shares of Goodness Growth Holdings are down by 3.8% so far in 2022, while Verano shares are off by 16.3%. The Cannabis ETF THCX, +3.63% has lost 12.9% while the S&P 500 index
SPX,
slipped 2.0%.
See Also: New York’s new cannabis chief vows that half of legal licenses will go to social justice efforts
