Chicago: The Unlikely Hub of Cannabis M&A

Written by: Eric Sandy – Cannabis Business Times

As the sheer size and complexity of cannabis mergers and acquisitions expands, market consolidation is bringing multi-state operators closer together than ever before. Cannabis remains a fragmented marketplace in the U.S., and, while political tides are slowly turning in Washington, D.C., this may be the status quo for some time. M&A is the force that unites distinct geographies in the U.S. cannabis market.

Chicago happens to be at the epicenter.

Crain’s Chicago Business published a great piece on the congregation of high-value transactions taking place in that city. Known more for the Illinois medical cannabis program’s progressive approach to opioid addiction, Chicago is also a comfortable base for the headquarters of major companies across a wide spectrum of industries. In the cannabis space, those growing businesses are in the mood to acquire others—or to sell off to a company from another state. 

Here’s a list of some of the major cannabis deals struck in the greater Chicago area:

– Cresco Labs’ acquisitions of Origin House and VidaCann 

– MedMen’s acquisition of PharmaCann 

– Harvest Health & Recreation’s acquisition of Verano Holdings 

– Green Thumb Industries’ acquisition of Integral Associates 

Crain’s pointed to Grassroots Cannabis as a Chicago-based company poised to hit the U.S. marketplace with an infusion of cash. The company raised $90 million earlier this year. Grassroots will funnel the money toward its Litchfield, Ill., cultivation facility, but executives have also pointed to further aspirations.

“We’re focused on gaining scale . . .[and] looking to buy scale in important states we aren’t in,” Grassroots CEO Mitch Kahn told Crain’s. The company is even hiring an M&A analyst. 

Presently, Grassroots operates in Illinois, Nevada, Pennsylvania, Michigan, Maryland, Oklahoma, Ohio, Vermont, North Dakota, Arkansas and Connecticut.

In our recent Cannabis Business Times cover story on Cresco Labs, we looked at how the massive multi-state operator hone its consumer-packaged goods-inspired approach to growing a company in the cannabis space. “We refined our skills in a very difficult environment, which was Illinois,” President Joe Caltabiano said. “We put our framework together, we sharpened our tools, went into another market, did it intelligently, and then were able to really scale post-Pennsylvania.”

We would say the rest is history, but the story is still unfolding.

Looking across Chicago, the Crain’s piece landed with a terrific kicker: “I don’t think anyone planned or thought Chicago would be the center of multiple [large operators],” John Downs, director of business development at Arcview, said. “Will that continue to be the case? I don’t know. Consolidation will continue.”