Bay Area Dispensaries Sign Big Deals With Canadian Cannabis Companies

1 min
Retail clerks sell cannabis to customers at The Apothecarium in San Francisco's Castro neighborhood. The business was one of the first dispensaries in the city licensed to sell recreational marijuana, following California's legalization of the drug in 2018. (Tiffany Camhi/KQED)

Two Bay Area cannabis dispensaries announced big deals this week with publicly traded Canadian marijuana companies.

The Apothecarium, which operates three popular dispensaries in San Francisco and one in Las Vegas, accepted an offer of $118 million in cash and stock from TerrAscend, a cannabis company in Toronto.

In a separate deal, Oakland-based Harborside, one of the largest dispensaries in the country, announced a new partnership with Lineage Grow Co., also in Toronto. The arrangement will allow Harborside to be listed on the Canadian Securities Exchange, a favored destination for U.S. marijuana businesses.

The two deals are subject to regulatory approvals in both countries.

Last October, Canada became the first major world economy to legalize recreational marijuana (it’s also legal in Uruguay), and a growing number of U.S. cannabis businesses are looking north for investors.

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"There is a gigantic need for capital in the U.S. cannabis industry and because the capital markets in the United States are completely closed to us, we are forced to look elsewhere," Apothecarium CEO Ryan Hudson said.

He noted that despite the recent legalization of recreational marijuana in California, the industry is still illegal under federal law and completely excluded from any sanctioned U.S. market exchanges.

As long as marijuana remains illegal federally, he added, California's marijuana industry will increasingly look for investors in Canada and other countries where the drug could soon be legalized.

The Apothecarium, which Hudson helped launch in 2011 following six failed tech startup ventures, now sells hundreds of cannabis products, including chocolate truffle edibles and beverages.

In 2018, the business reported more than $45 million in revenue across its four operations in California and Nevada, according to a TerrAscend press release announcing the acquisition.

Hudson said the business would continue to operate under the same name and management.

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