Buyer’s Opportunity

Washington State cannabis giants Uncle Ike’s and Main Street Marijuana have partnered to go on sale together as one, for $50 million. The unprecedented move, announced in mid-January, has caused quite a stir. The future of the Uncle Ike’s/Main Street Marijuana merger and sale will be an indicator for the rest of the cannabis industry in Washington. If the two stores can pull it off, and find a buyer with that kind of capital, it will be a huge message to those in favor of cannabis prohibition. But at this point, that’s a pretty big “if.”

Uncle Ike’s and Main Street Marijuana are Washington State’s foremost cannabis powerhouses. As the two highest grossing cannabis retailers in Washington State, if anyone can command a $50 million price tag, it’s these two retailers. Uncle Ike’s owns three cannabis retailers, all in Seattle. The three locations are in the Central District, White Center and Capitol Hill. Main Street Marijuana cashed in on the Oregon border market pre-legalization with three locations in Southwest Washington. In January of 2017, Main Street Marijuana was the top selling retailer in Washington State, selling $1.3 million worth of cannabis. Uncle Ike’s came in at second for January, with over $800,000 in sales.

“The prospect that the state is going to allow out-of-state investment is a big deal. The idea of opening it up to out-of-state investment is concerning.”

With those impressive numbers, it’s no wonder why Main Street Marijuana owner Ramsey Hamide and Uncle Ike’s owner Ian Eisenberg are so confident in their asking price. Hamide spoke with some press about the sale, and why he feels the price is a fair one.

“Collectively, between us, we did $50 million in revenue last year,” Hamide said. “It’s realistically priced for the right buyer. Whether anyone is going to come forward with the uncertainty with [President Donald] Trump and [U.S. Attorney General Jeff] Sessions, I don’t know.”

The steep price and uncertainty surrounding the current administration aren’t the only obstacles for these two sellers. First, Washington State currently only allows single individual or company to own up to three cannabis business licenses. This would create an obvious issue for any solo buyer looking to purchase all of those businesses. Although, the owners have expressed that they are willing to sell each business separately to the right buyer.

Another issue with the sale? Washington State only allows residents to own and operate cannabis businesses. Currently, some legislation is making the rounds in Olympia that may open the market up to out-of-state investors. This development may have been a catalyst for the sale.

“The prospect that the state is going to allow out-of-state investment is a big deal,” Eisenberg said. “The idea of opening it up to out-of-state investment is concerning.”

When asked if he’d sell to out-of-state investors, Eisenberg answered, “I’d rather not, but if it becomes legal, sure.”

This sale, along with so much else in the cannabis industry, is up in the air at the moment. It seems that we will just have to wait and see what the future holds for Washington State’s cannabis industry.