Columbia Care announced last week that it would enter the Colorado cannabis market with the $140-million acquisition of The Green Solution (TGS), a deal that merges two organically grown cannabis companies and two complementary product lines.
Founded in 2010, TGS was one of the first cannabis companies in Colorado to transition to the adult-use market. It currently operates 21 dispensaries across Colorado, with two additional stores slated to open in Q4 of 2019. The company also operates one of the country’s largest automated manufacturing facilities, which currently produces over 225,000 units of branded products per month, as well as three indoor cultivation facilities with more than 250,000 square feet of grow space, a 16,000-square-foot greenhouse and 140 acres of outdoor cultivation space.
“We’ve essentially mastered our supply chain and really focused on efficiencies, principles and … market share, and understanding what that means to a cannabis company,” TGS Co-Founder and Co-President Kyle Speidell tells Cannabis Business Times. “With that, we’ve really tried to find a catalyst to the next step, which is doing the same in other areas of the country. Over the course of the last two years, we’ve really focused on finding a suitor that we felt was comparable in the sense of matching our same ideas, but [that] had a broader platform that [would allow us to] build a very deep company into more of a broader company that had a lot more markets. Columbia Care … was a perfect match for our operational depth to be added to their 15 markets.”
Upon closing, Columbia Care, a vertically integrated multistate operator, will have 93 total facilities across 15 U.S. states, including 74 dispensaries and 19 cultivation and manufacturing locations. The company also has a presence in the European Union.
Colorado Gov. Jared Polis signed House Bill 19-1090 into law this past summer, which allowed out-of-state investment and ownership opportunities in the state’s cannabis market.
TGS has long been an advocate of H.B. 19-1090 and focused on lobbying and legislative initiatives to get the bill passed. Upon the bill’s passage, the TGS team toured more than a dozen multistate operators’ facilities before landing on Columbia Care as a buyer, Speidell says.
The Columbia Care team also went to great lengths to find the right Colorado partner.
“Ultimately, Colorado being a maturing market, we wanted to make sure we’re partnered with the best group in the state,” Columbia Care VP of Corporate Affairs Adam Goers tells Cannabis Business Times.
TGS’ organic growth profile and robust management team made the company an attractive target for Columbia Care, as well as its suite of products and brands, which Goers says complements Columbia Care’s line of pharmaceutical-quality cannabis products.
“It really provides a great opportunity to take The Green Solution’s product development and brands and bring them to Columbia Care markets throughout the country,” Goers says, “[It also] presents a great opportunity for Columbia Care to really renew the medical and health and wellness market in Colorado by introducing our leading pharmaceutical-quality products and our health and wellness lines into a market where perhaps that hasn’t been the biggest emphasis as of late.”
“They have amazing products that they’ve created at Columbia Care, very much medical- and pharmaceutical-driven, [and] that will help with all areas of the customer base,” Speidell adds. “That is a desirable product line for TGS. In the short-term, you’re going to see a lot of Columbia Care’s products being added to TGS stores and vice versa. You’ll be seeing a lot of the product lines from TGS being added to the Columbia Care stores. We both have vast diversification of product lines that we simply don’t have as one another.”
The acquisition also combines Columbia Care’s Columbia National Credit Card with TGS’ robust loyalty program.
“It creates a seamless opportunity for patients and customers to get their products and their rewards,” Goers says. “Columbia National Credit was the first of its kind in the country, and we argue that the really robust rewards program with a credit card option is a game-changer.”
Columbia Care plans to leverage TGS’ strong team going forward as it exports TGS products and expertise throughout the country, and as it adds its credit card and pharmaceutical-grade products to TGS’ Colorado locations.
“As a company, TGS is going to stay,” Goers says. “Their team is going to be there and driving forward just like the day before the announcement, just like they will the day after the close.”
“We were really focused on looking at this from a five-to-10-year plan, and so the management of TGS is not going anywhere,” Speidell adds. “We plan to continue building this company alongside of Columbia Care for the next decade. … We couldn’t have done this without my hard-working staff. I have 700 employees who have given everything to this company over the course of a decade, and same with my family, so we just couldn’t be more excited to be where we’re at.”
And this surely isn’t the last of the deals coming out of Colorado, now that the market is open to outside capital.
“It’s going to be a rapid change,” Speidell says. “A lot of us in the industry in Colorado have sat on the sidelines watching capital flow around Colorado and opportunities be missed because we simply couldn’t take advantage of them. I think, in the short few months prior to 1090 being implemented, you’ve already seen our transaction, you’ve seen a large rollup in Colorado through other acquisitions, … so there’s been already quite a bit of action that’s happened in a short amount of time, simply because we’ve all been sitting, waiting for it. I think you’ll see that continue for the next few years as more multistate operators want to get into the market. This market at this point is one of the largest in the world and a huge opportunity for people to be a part of where this started."