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Cannabis Deal Takes a Loss

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A Massachusetts company interested in purchasing Oregon’s largest cannabis business, Cura Partners, Inc. decided to drastically change the conditions of the buy as a result of the cannabis stock dipping in value.

Headquartered in Oregon, Cura Partners, Inc. sells its products to other states like Nevada, Arizona and California. The company rapidly grew after recreational cannabis in Oregon was legalized in 2014. While recreational cannabis was not legal in Massachusetts at that time, the state followed suit two years later in 2016.

Originally, the deal was just shy of $1 billion for Massachusetts-based Curaleaf to acquire Cura Partners, Inc. However, that price has now dropped to closer to $300 million. Cura Partners, Inc. has been offered this lower number most likely due to the recent decline in cannabis stock value, which could be indication of an unpredictable future for profits.

Curaleaf released the deal announcement in May of this year stating, “Curaleaf will acquire all outstanding equity securities of Cura Partners in exchange for 95.6 million shares of Curaleaf.”

The original transaction overview detailed that the “all-stock transaction structure” would allow financial flexibility. It was announced that CEO of Cura Partners, Inc. Cameron Forni, would join Curaleaf as the president of the Select brand. CMO of Cura Partners Inc. Jason White, was also invited to join the company as its Chief Marketing Officer. The deal would also give the Cura Partners the right to elect one person to serve on the Curaleaf Board of Directors and would be expected to close at the end of 2019.

“Curaleaf will acquire all outstanding equity securities of Cura Partners in exchange for 95.6 million shares of Curaleaf.”

 

The transaction overview presented impressive numbers including Curaleaf’s presence in the United States, which reaches a collective 146 million people in the states it operates. Currently, Curaleaf owns 49 dispensaries, 14 cultivation sites and operates in 12 states total. The promise of acquiring the Select brand from Cura Partners, Inc. was anticipated as one of the biggest deals to occur within the cannabis industry. The Select brand includes vape cartridges, disposable vape pens, infused gummies and CBD/THC drops.

Yet, several months after the deal was introduced, the east coast company’s decision to alter the terms of the deal came as a result of not only the drop in stocks. It could be that the growing concern over vaping health risks and the uncertainty of legal cannabis at a federal level have also had a negative effect on the perceived value.

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