LANSING – Misdemeanors involving low-level marijuana use and possession would be automatically cleared from Michiganders' records under a bill that will be introduced this week by Sen. Jeff Irwin, D-Ann Arbor.

The bill would allow roughly 235,000 people to have their misdemeanor records for marijuana use and possession automatically expunged without having to go through the courts.

"We would go in through the Michigan State Police's database and make changes to records electronically and administratively without having to go through all the time and expense of going through the courts," Irwin said. 

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WAKEFIELD, Mass., July 17, 2019 /PRNewswire/ PRESS RELEASE -- Curaleaf Holdings Inc., a leading vertically integrated cannabis operator in the United States, today announced it has signed a definitive agreement to acquire GR Companies, Inc. (Grassroots), the largest private vertically-integrated multi-state operator, in a cash and stock deal valued at approximately $875 million. This transaction solidifies Curaleaf's position as the world's largest cannabis company by revenue and the largest in the U.S. across key operating metrics.

The highly complementary acquisition brings together the largest public and largest private multi-state operators in the U.S. to offer a full range of products to consumers in states across the country. As a market leader throughout the Midwest, Grassroots has a portfolio of 61 dispensary licenses, with 20 operating today, and 17 cultivation and processing licenses that will substantially accelerate Curaleaf's continued expansion across the nation.

Grassroots has a leading presence in large markets in which Curaleaf presently does not operate, including Illinois, which in June became the 11th state to legalize adult-use cannabis, and Pennsylvania, the fifth most populous state in the U.S. The proposed transaction will expand Curaleaf's presence from 12 to 19 states, and the combined company will have 131 dispensary licenses, 68 operational locations, 20 cultivation sites and 26 processing facilities. With the acquisition, Curaleaf will also add new markets in Arkansas, Michigan, North Dakota, Oklahoma, and Vermont, and build on its existing businesses in Connecticut, Maryland, Nevada and Ohio. Upon completion of the proposed transaction, Curaleaf will be the largest medical and adult-use cannabis company with access to a total population of approximately 177 million people.  

"With the acquisition of Grassroots and the pending acquisition of Select, Curaleaf is the world's largest cannabis company by both revenue and operating presence," said Joseph Lusardi, CEO of Curaleaf. "With a combined 68 open dispensaries, this transaction significantly accelerates our expansion strategy and strengthens our reach across the medical and adult-use markets. In addition, it enhances the depth of our retail and wholesale platform across the country. By leveraging our scale, as well as our market leading capabilities and expertise, we will continue to deliver value for our shareholders."

Mitch Kahn, co-founder and CEO of Grassroots, said, "Today's announcement is a testament to the hard work of the many employees that helped make Grassroots the leading cannabis company in the Midwest. This acquisition will enable us to give our patients and retail partners greater access to products that adhere to the highest standards of quality and reliability, and our employees the opportunity to be part of a best-in-class operator." 

This transaction builds on the numerous strategic transactions announced to date in 2019 which expanded Curaleaf's footprint in Arizona, California, Nevada and Ohio, continuing to differentiate the company as the most accessible cannabis brand across the U.S. The combined entity's geographic reach, purchasing power, economies of scale and joint best practices solidifies its top position amongst U.S. multi-state operators.

Transaction Terms and Approvals

Curaleaf will acquire Grassroots for total consideration of approximately $875 million, composed of $75 million in cash, 102.8 million subordinate voting shares of Curaleaf and $40 million in Curaleaf shares priced at the 10-day volume-weighted average price prior to closing of the transaction. At closing, securityholders in Grassroots will have approximately 16% pro forma ownership of Curaleaf on a fully-diluted basis after giving effect for the Select acquisition.

The proposed transaction is expected to close in early 2020, subject to customary closing conditions, Grassroots' stockholders' approval and regulatory approvals. The transaction has been unanimously approved by the Boards of Directors at both companies.

Management and Board

The Grassroots management team brings deep experience in the Midwest market, elevating the combined entity's expertise in retail, real estate, legal and licensing, finance, marketing, brand development, sales and logistics.

At closing of the proposed transaction, the core securityholders of Grassroots will have, as a group, the right to appoint one person to serve on the Curaleaf Board of Directors. Mitch Kahn, co-founder and CEO of Grassroots, will fill the allotted board seat. Kahn co-founded Grassroots in 2014 and brings with him more than 20 years of executive experience.

Additionally, co-founders Matt Darin and Steve Weisman will join Curaleaf's senior management team. Darin, Chief Operating Officer of Grassroots, has more than 15 years of experience as an entrepreneur and executive in the cannabis and commercial real estate industries. Weisman, Chief Strategy Officer of Grassroots, has extensive entrepreneurial and corporate governance experience as an attorney at Kirkland & Ellis in Chicago.

“How does Cannabis One find its acquisitions?” is a question I hear every day. Acquiring a cannabis brand or dispensary is a risky—and costly—endeavor. The potential for profits is massive, but so is the potential for loss. By conducting a thorough investigation and looking for certain risk factors, acquirers can mitigate risk and ensure they’re making a worthy addition to their portfolio.

Cannabis One’s list of criteria for M&A begins with a high-level filter of the financials. With dispensaries, we look for a financial picture that illustrates market stability, depth of penetration, and market share of the neighborhoods. A targeted dispensary’s financials must reflect a smooth, stable cash flow for the prior 12 months with minimum $3.5 million in top-line revenue and a flat-to-up trend with at least a 40-percent gross profit. After financial filters are satisfied, our analysts conduct a “red flag scan.” 

The team objectively looks for more than a dozen red flags, such as licensing issues, accounting irregularities, disciplinary actions from regulators, complaints filed against the entity, high turnover, and choppy cash flow. This last factor is particular concerning—and usually an instant dealbreaker, since it more often than not signifies serious systemic problems that cannot be easily resolved. 

Gaps in a dispensary’s cash flow are never a positive indicator and will always lower the target’s “deep-dive” (or DD) due diligence score. However, there are rare instances where the gaps in cash flow can actually be cleared, such as a product recall or a temporary closer by regulators to conduct an unwarranted investigation. If this investigation finds the dispensary not in violation, we can restore it to full working status. 

If these red flags are cleared, the acquisition target is cued for our proprietary DD due diligence. However, if our analyst doesn’t grant clearance, the file is downgraded, and the acquisition target is moved to our watch list until management can resolve the issues. We have developed our proprietary DD scoring system to speed up the due diligence process; it creates a unitized work flow that breaks up the workload to allow multiple analysts to work on the same file simultaneously. This process has removed the time bottleneck that most due diligence was causing prior to our implementation structure; it has increased our analysts’ productivity by more than 400%. Through this process, our firm has maintained its competitive edge in the cannabis consolidation race. 

Upon completion of the DD, our M&A analysts prepare a report and assess a DD score. This score is similar to a personal FICO score: it summarizes the business in an objective nature and in a format that can be easily communicated to the M&A committee for final decision. Dispensary acquisitions tend to be straightforward because the financials tell a fairly complete story: an objective and quantifiable decision-making process is applied to most acquisitions with very little subjectivity.

Cannabis One’s acquisition criteria for cannabis brands, however, is very different from our dispensary acquisitions because the evaluation criteria has to be much more subjective. Market share and rapid growth in market share are the most import metrics we look for in our brand acquisitions. With brand acquisitions, the revenue hurdle for consideration is currently $5 million in trailing 12-month revenue with an overall up-trending growth pattern.

The brand acquisition process commences with a review of the financials similar to the screening conducted on dispensaries. We generally look for the same type of immediate red flags as our dispensaries. Once the revenue and red flag screens have been satisfied, our M&A team starts a subjective evaluation to determine the brand’s penetration into its respective market. Like any brand acquisition, the most important factor in our brand acquisition decision-making is market share. 

To determine market share, we have developed a grading process taking into consideration factors like: 1) the number of dispensaries in a geographic area that carry the brand; 2) the brand’s location within dispensaries: whether it’s a highly-trafficked area or tucked into the back of a site; 3) the number of a brand’s products displayed in each store. (Less than 25 percent is considered an immediate red flag and typically a disqualifier from consideration.)

The final step in Cannabis One’s due diligence process for brands is the onsite visit. Once Cannabis One’s M&A analysts complete this onsite visit, they prepare an extremely comprehensive report on the brand—sometimes more than 100 pages long—for our acquisition committee. The committee evaluates the analysts’ recommendations, prepares deal terms, and rates a target based on a proprietary grading scale developed in-house. And then, finally, an offer will be made. From there, it’s off to the races!

DENVER, July 17, 2019 /PRNewswire/ PRESS RELEASE - On the heels of another Midwest state legalizing cannabis, an industry-wide franchisor is making moves and building its presence in the region with expansion into Missouri and several deals in the works in Illinois as well as other states across the country.  

ONE Cannabis, a multi-state franchisor and vertically integrated cannabis operator, announced today that it has entered into management consulting agreements with Missouri residents for development of the franchise in the St. Louis, Missouri, area.

"Transformational growth is on the horizon for the Midwest, and the players who are going to win are the ones who take the opportunity to prepare for entry now and look to the guidance and support of a seasoned franchise to help navigate the complicated rules of cannabis market entry," said ONE Chief Operating Officer Mike Weinberger, who has nearly two decades of franchise industry experience. "Think of legalization as the gunshot that kicks off a race – you have to wait for the signal to start, but that doesn't mean you show up without your shoes."

ONE Cannabis will be presenting its franchise opportunity in Chicago July 17-19 at the Arcview Cannabis Investor Forum – an exclusive event for institutional and accredited investors interested in the cannabis space. In addition to meeting with prospective franchisees at the ONE Cannabis booth, Weinberger will be giving a 20-minute presentation on Friday, July 19 at 11:20 a.m. CT about the ONE Cannabis franchise opportunity.

He will also be speaking on a panel Friday at 9 a.m. CT titled, "Bigger is Better: Scale to Success." The discussion will highlight how multi-state & international operators execute ambitious business plans, the challenges and rewards of scaling across state & international borders, in what instances vertical or horizontal integration is desirable and outlook on industry consolidation. Weinberger will share how franchising can be utilized as a vehicle to drive growth, and how the franchise model can be adapted to meet the needs of cannabis applicants nationwide.

"If you're entering cannabis as an industry newcomer, partnering with a franchise [ONE Cannabis] puts you worlds ahead of the competition," Weinberger said. "Rather than figuring everything out on your own, you have a proven playbook in hand that has been tried and tested in legal cannabis for over 10 years, as well as a partner who are invested in your success and guiding you every step of the way. Cannabis is complicated. We simplify it for our franchise partners so they can focus on scaling and enhancing their investment."