Medical cannabis operator with facility in Manchester to be acquired in $240M deal

Green Leaf Medical’s medical cannabis production and dispensary facility at 2804 Decatur St. (Courtesy of Green Leaf)

The company behind Richmond’s sole medical cannabis production facility is expected to be absorbed by a publicly traded firm that’s already active in the state.

New York-based Columbia Care Inc. announced Tuesday it signed a definitive agreement to buy Green Leaf Medical LLC in a cash-and-stock deal valued at $240 million. Green Leaf (stylized “gLeaf”) is a Maryland-based company that operates a medical cannabis production and distribution facility in Manchester.

The acquisition would bring Green Leaf’s operations in Virginia, as well as its operations in Maryland, Ohio and Pennsylvania, under Columbia Care’s umbrella. The deal remains subject to regulatory approval.

Columbia Care CEO Nicholas Vita discussed the deal in a call with investors Tuesday. A company spokeswoman didn’t respond to a request to interview Vita.

“We have exceptional operations of our own in those markets, and the teams combined will be able to take advantage of those market opportunities in a way I don’t think we could have done on our own,” Vita said in the call with investors.

The deal is expected to close in summer 2021. Once finalized, Green Leaf’s entire management team would be retained as part of the acquisition. Green Leaf CEO and co-founder Phil Goldberg would join the board of directors at Columbia Care.

Goldberg said in an email that Green Leaf will continue to operate as a distinct brand under Columbia Care’s umbrella of existing brands.

“This will also give gLeaf the opportunity to distribute many of the Columbia Care brands, providing our patients with greater access to a wider variety of medical cannabis products,” Goldberg said.

The acquisition’s price tag shakes out to $45 million in cash and $195 million through issuance of 43.9 million shares of Columbia Care stock. There’s a possibility of additional milestone-based payments.

Founded in 2012, Columbia Care operates about 30 cultivation and manufacturing facilities, as well as 80 dispensaries, in 18 American jurisdictions and in Europe. The company manufactures and sells medical and recreational products, with brands such as Platinum Label CBD and Amber.

Green Leaf makes cannabinoid oil-based products, which are sold to registered patients as medical treatments. Green Leaf openedits 82,000-square-foot Manchester facility at 2804 Decatur St. to patients in November.

The acquisition would appear to further consolidate Columbia Care’s share of the Virginia medical cannabidiol market, as it will effectively possess two of the five CBD processing-and-dispensary facility operator licenses that the state doled out in 2018.

Green Leaf holds the license for Health Service Area 4, a 27-locality zone that includes Richmond, Chesterfield, Henrico, Petersburg and Hanover. Columbia Care holds the license for Health Service Area 5, which is in the southeastern part of the state, and it has a CBD production facility and dispensary in Portsmouth, though it isn’t open to the public yet, according to the company’s website.

There isn’t a rule against an operator holding multiple licenses in the state. Barbara Allison-Bryan, chief deputy director of the Virginia Department of Health Professions, said in an email that the Code of Virginia “does not prohibit the ownership of a pharmaceutical processor in more than one health service area.”

Vita touched on the topic in Tuesday’s call.

“I think the state of Virginia has developed their platform and their regulatory framework to allow for the issuance of additional licenses,” Vita said. “For us and the way we think about this, even with two licenses under one operator, that doesn’t really change the competitive dynamic at all because you have some very capable operators down there, you have supportive regulators and you have a market that continues to expand, particularly if it moves from medical to adult use.

“We’re optimistic that the state of Virginia will be enthusiastic about this. We obviously have a lot of regulatory conversations to go through.”

Goldberg echoed those sentiments.

“We believe the business combination will be permitted. We are just beginning the process of notifying the board of pharmacy,” he said.

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