With its acquisition of Grassroots, Curaleaf now operates 88 dispensaries and 22 grows across 23 states.
Image courtesy of Curaleaf
In late July, Curaleaf closed an approximately $700-million deal to acquire Grassroots Cannabis. The move places Curaleaf boots on the ground in 23 U.S. states with a footprint that includes 88 operational dispensaries and 22 cultivation sites with 1.6 million square feet of current cultivation capacity.
The acquisition makes Curaleaf the largest cannabis company in the world, based on its anticipated $1 billion in annual revenue, a stat touted by the company's executive chairman on CNN Business in July.
And, yes, it’s a big deal on face value, but Curaleaf CEO Joe Lusardi says that the transaction represents a pivot toward the longer-term direction of the legal cannabis marketplace.
For instance, the acquisition provides Curaleaf a sturdy, scaled-up position in quickly growing markets like Illinois and Pennsylvania. Not only are those states rolling in cannabis revenue right now (Illinois saw more than $300 million in adult-use cannabis sales through July this year, according to the Illinois Department of Financial and Professional Regulation), but customers in those markets will be a driving force behind shifts in product category demand and connoisseurship.
Lusardi argues that companies will need to be agile and well capitalized to meet that nuanced demand as different states’ customer bases find their footing. Flower sales dominate in the early days of adult-use legalization, he says, but that market mainstay is often supplanted with rising concentrates sales as consumers learn more about cannabis—which in turn prompts more in-depth concentrates R&D back in the lab.
“Everybody's talking about how Illinois is a great market, but if you don't actually have the capacity to capitalize on it, then it really doesn't matter,” Lusardi says. “And I think what's important about Grassroots is that it was a developed business. It wasn't just a collection of licenses. It was assets that these guys have been working on for half a decade.”
Lusardi and the Curaleaf team homed in on Grassroots because they saw a cultural match that could deliver long-term on the companies’ visions for the industry.
A good understanding of your own company’s values is key to productive M&A.
“The culture of a business is a big factor in how successful you’re going to be with integration and how well the transaction ultimately works out,” Lusardi says. “We really loved the Grassroots team, and they were built really much like Curaleaf—as a vertical business, very entrepreneurial.”
That’s important—not only for the short-term health of the business and its employees, but for the long-term strategy that all M&A deals involve. Curaleaf, intent on developing “the first national cannabis brands” (Curaleaf itself and Select, an earlier acquisition), is building out a coast-to-coast presence to do just that.
“Many of the MSOs have … retrenched into markets where they were performing well or where they have capital to build out, whereas Curaleaf has really continued to keep our foot on the accelerator and expand into more markets—given where we have a strong balance sheet and we can actually take on those projects,” Lusardi says. “And I think that's going to pay for itself—maybe not this quarter, but in the next couple of quarters, you're really going to see that separation as a result of all the work we're doing to put assets online and then invest into developing markets.”
Eric Sandy is digital editor for Cannabis Business Times, Cannabis Dispensary and Hemp Grower.
COVID-19 Derails Cannabis Companies’ Hiring Plans
Departments - Upfront | Fast Stats
According to a survey from Vangst, the pandemic paused expansion at both plant-touching and vertically integrated businesses.
Source: Vangst survey of 39 U.S. cannabis companies between March 26 and April 24, 2020.
kolonko | Adobe Stock
Cannabis Research Focuses on Investigating 'Harms' of Plant
Departments - Upfront | Fast Stats
According to an article published in Science magazine, the U.S., Canada and the U.K. spent a significant portion of research dollars studying the negative side effects rather than the potential benefits.
A new analysis of cannabis research spending in the U.S., Canada and the United Kingdom published in Science magazine found that half of the money spent on research goes toward investigating the potential negative side effects and ramifications of misuse of the plant.
How Massachusetts Allocates its Adult-Use Cannabis Tax Revenue
Departments - Upfront | Fast Stats
The Boston Business Journal, through public records requests, analyzed how Massachusetts has spent its adult-use cannabis tax revenue during the past two fiscal years.
The Boston Business Journal, through public records requests, analyzed how Massachusetts has spent its adult-use cannabis tax revenue during the past two fiscal years. Here’s what the analysis found:
4 CO2 Extraction Considerations: Cannabis & Hemp
Features - Cultivation
How to optimize your extraction parameters based on cultivar CBD and THC content.
Comparison of CO2 extracts: subcritical extract of high CBD cannabis (left), subcritical extract of high THC cannabis (center), and supercritical extract of high THC cannabis (right).
Photo by Rachel Loeber
Within the cannabis and hemp industries, the utility of CO2 for extracting cannabinoids and terpenes from dried plant material is widely known and accepted. As an extraction solvent, CO2 is cheap, clean, nontoxic and nonflammable. However, what may come as a surprise (especially to those new to cannabis and/or hemp processing) are the significant cultivar-to-cultivar differences when performing CO2 extraction runs. Extraction scientists should consider several key questions when developing cultivar-specific CO2 extraction protocols.
1. What is the extraction goal?
Prior to creating any new CO2 extraction protocol, it’s important to consider the desired outcome. Is the goal to extract all the desirable compounds from the biomass as quickly as possible? Is terpene preservation or oil fractionation (a separation process) important? The answers to these questions will determine whether you utilize supercritical or subcritical CO2 extraction, or a combination of the two.
Supercritical CO2 extraction takes place at pressures above 1,083 psi and temperatures greater than 88oF when the CO2 has reached its critical point where liquid and vapor coexist. Behaving like a gas, supercritical CO2 expands to fill the volume of the extraction vessel and can freely diffuse through ground cannabis or hemp material within the vessel. Behaving as a liquid, supercritical CO2 has great solvent power capable of extracting a wide range of compounds from biomass with a greater percent yield in a shorter amount of time compared to subcritical. Because supercritical CO2 extraction employs higher temperatures and pressures, terpenes and other more volatile compounds may be degraded or lost during the process.
Subcritical CO2 extraction occurs below the critical point (less than 1,083 psi and lower than 88oF) where CO2 is in the form of a liquid. While subcritical CO2 has decreased solvent power, this can be advantageous, as it allows for more selectivity in the extraction process. Subcritical is ideal for extracting terpenes and other more volatile compounds from cannabis or hemp, and many of the more undesirable components (fats, waxes, and chlorophyll) are not readily soluble in subcritical CO2. This is useful because subcritical extraction is capable of fractionation, producing oils rich in CBD, THC, and other cannabinoids. The cooler temperatures used in subcritical also mean there is minimal decarboxylation that occurs in the process, preserving the acid forms of CBD and THC (CBDA and THCA) that are naturally present in the plant. The major drawback is time—subcritical CO2 extraction generally takes two to four times longer than supercritical to get the same yield.
(The best conditions for using a combination of these two methods will be addressed later.)
2. What is the next step for the extracted oil?
A closely related question to the first one: What do you plan to do with the cannabis or hemp oil once it is extracted? Will it undergo winterization to remove waxes? Will it be distilled? Will it need to be decarboxylated for use in food products or oral dosage forms (capsules, lozenges, tinctures)? The post-extraction processing/purification pathway will help guide in the development of your CO2 extraction process. For example, if you plan to perform thin film distillation on the extracted oil, you could likely get away with doing a higher pressure supercritical CO2 extraction run, which would result in a faster run time, but the extracted oil would be less refined.
Determining whether to use subcritical or supercritical extraction depends on several factors, including cultivar and desired outcome.
Photo by Rachel Loeber
3. What is the cannabinoid composition of my starting material?
This question is key when it comes to CO2 extraction method development. Studies have demonstrated that THC, CBD, and other cannabinoids have differing solubility in supercritical CO2, with CBD having higher solubility compared to THC (see “References” sidebar for studies on that subject). While the researchers in these studies determined cannabinoid solubility at a relatively high range of temperatures (greater than 100ºF) and pressures (more than 2200 psi), similar trends in THC and CBD solubility are observed in practice at lower temperatures and pressures.
When extracting using the same parameters for temperature and pressure, we have consistently observed that hemp/CBD-dominant cannabis cultivars extract much more efficiently than high THC cultivars. Of the high-CBD strains we process, total extraction run time is two- to three-fold less than their high-THC counterparts, yet achieves the same yield of raw oil. The raw CO2 extract from high CBD strains generally is less viscous compared to high THC extracts, making for easier recovery and cleanup.
For high THC cannabis strains, we routinely perform a series of CO2 extraction runs spanning both sub- and supercritical parameters to fractionate terpenes and cannabinoids. Performing additional extraction runs on the same feedstock also ensures that you recover as much THCA as possible from the biomass and optimize extraction yield. If you plan to perform some type of post-processing on the extracted oil (as described previously, in the answer to the second question), you can save time by performing a single supercritical CO2 extraction run.
4. How do I develop/optimize a cultivar-specific CO2 extraction method?
Most manufacturers of CO2 extraction equipment will provide a set of basic parameters for both sub- and supercritical extraction in their operating instructions. While this is an obvious starting point, we have experienced great success systematically changing time, temperature, and pressure settings to achieve optimal extraction results. To ensure you know how the change is impacting the extraction run, only change one parameter at a time and clearly document the times, temperatures, and pressures observed. With this information, you will be able to correlate method parameter changes to changes in yield and cannabinoid potency. Don’t be afraid to experiment! Most CO2 extractors operate over a wide range of temperatures and pressures, and it is helpful to collect extraction data covering this range—the ideal parameters for your cultivar may not align with predictions.
While we expect and routinely observe extraction differences between hemp/CBD-dominant cannabis cultivars and high-THC cultivars, we have also noted cultivar-to-cultivar differences within each class. We have witnessed substantial differences in extraction efficiency/oil potency between numerous high-THC cannabis cultivars run using the same extraction parameters. In some cases, these differences were overcome by increasing the extraction pressure or run time, while in others, we re-extracted the same biomass to strip out the remaining THCA.
In comparing extraction efficiency cultivar-to-cultivar, it is very helpful to monitor cannabinoid potency in the extracted oils as well as in the spent hemp/cannabis feedstock. This will help determine when the extraction run is complete as well as determine which parameter changes result in a higher potency oil.
Dr. Rachel Loeber, Ph.D., is chief science officer at Minnesota-based Leafline Labs.
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