Maine Lawmakers Will Get Another Shot at Recreational Marijuana Rules
Marijuana Industry News June 6, 2019 MJ Shareholders
In a headline-grabbing M&A deal that reveals much about the Colorado cannabis marketplace, Denver-based Medicine Man Technologies announced its intent to acquire two companies: Los Sueños Farms, which boasts the largest outdoor cannabis cultivation business in the state, and MesaPur, which operates as Purplebee’s and holds retail and manufacturing licenses.
Los Sueños Farms runs 36 acres of outdoor cannabis cultivation and 36,000 square feet of greenhouse space in southern Colorado—just outside Pueblo. The greenhouse space accents the farm’s outdoor output with more frequent harvests throughout the year.
Bob DeGabrielle, founder of Los Sueños Farms, will join the board of Medicine Man Technologies.
Purplebee’s is a veteran- and woman-owned CO2-extract manufacturing company that distributes infused cannabis products across its retail businesses. The company works closely with Los Sueños Farms for distribution, thus putting Medicine Man Technologies on a growth trajectory while U.S. sales trends see infused cannabis product sales soaring.
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The terms of the deal have not been publicly stated.
This acquisition is notable not only for the sheer size of the Los Sueños operation, but also because it shows the great leap in fundraising access made possible by the recent passage of HB 19-1090. The subject of much debate in Colorado, this new law allows for out-of-state investors to buy into the marketplace and for publicly traded companies to own and operates cannabis licenses in the state.
Gov. Jared Polis signed the bill into law on May 29, “opening up Colorado’s cannabis industry to outside investors and enabling increased investment by venture capitalists and private equity firms,” according to the Medicine Man press release.
Upon passage of the bill last month, Medicine Man Technologies co-founder and CEO Andy Williams said that the broader access to capital would help the company close its deals to acquire MedPharm Holdings and Medicine Man Denver (a corporate consolidate maneuver that brought four retail locations, a 40,000-square-foot cultivation operation and an estimated $25 million of annual revenue under the Medicine Man Technologies ownership umbrella).
Now, the company can add two more pending acquisitions to its portfolio.
“Since our inception, we have been focused on delivering the best products and cultivation methods, and the addition of Los Sueños Farms will play an integral role in our core business and service offerings,” Williams said in a public statement. “We also identified another key acquisition opportunity with one of Colorado’s leading dispensary and manufacturing companies: Purplebee’s. They are an established leader in providing high quality premium products that align with our vision and mission. We believe these two acquisitions will put us on a trajectory for accelerated growth, and secure Medicine Man Technologies as a leader in cannabis operations worldwide.”
While Williams vocally applauded the move, the broader U.S. cannabis industry is watching dispassionately to see how outside investment affects a circumscribed state market. Kris Krane, co-founder of 4Front (not based in Colorado), told the Denver Post that this sort of outside capital will bring a certain degree of market consolidation to U.S. states—something that so far has only been seen on a broader, multi-state level. The new law will also allow well-positioned companies to increase their pace of growth and their market reach.
“In the long term, you may see a downward impact on pricing, because you’re going to have companies that are now able top build operations of scale and efficiencies of scales they probably wouldn’t have been able to build without that kind of capital,” he said.
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