Multistate cannabis operator Verano Holdings announced earlier this month that it would acquire and combine operations with AltMed in Florida and Arizona in a merger that will form one of the largest private cannabis companies in the U.S.
Verano has vertically integrated operations in 12 states, with 17 Zen Leaf dispensary locations and 440,000 square feet of cultivation. The company produces a variety of cannabis products under the Encore Edibles, Avexia and Verano brands, and operates across both adult-use and medical markets.
AltMed is a vertically integrated medical cannabis company with 27 dispensaries operating under the MÜV brand. The company also manages 220,000 square feet of cultivation space in Florida and 30,000 square feet in Arizona, where it is expanding by an additional 50,000 square feet to meet increased demand.
When the transaction closes, the companies will operate eight cultivation facilities and 44 dispensaries under the Verano brand across 14 states, with plans for 32 additional retail locations.
Here, Verano Holdings CEO George Archos shares insight into the strategy behind the merger, as well as how the two companies will integrate their operations to achieve their broader goals.
Melissa Schiller: Why was AltMed an attractive acquisition target?
George Archos: We call it more of a strategic merger. The founders of that company are staying on board. Florida and Arizona were two attractive markets for us, and we looked at everyone in the space and the AltMed team was one of the top performers in Florida. We have a similar culture. They have a great business [and] great people, so the fit was almost like Verano had built their business. They operate in a very similar fashion, so it was very intriguing for us. Both teams are very excited for the future. The teams are both staying on board from the Verano side and the AltMed side, so it’s a very complementary transaction. And as we move forward, it’s a key piece to our puzzle.
MS: Why are Florida and Arizona appealing markets for Verano Holdings?
GA: We did not [have a presence in Florida or Arizona]. We divested our Florida assets in the Harvest transaction, so this is our re-entrance back into the market, [and it’s] the same with Arizona. It’s perfect for our footprint as well as teams.
Florida was always an attractive market for us. They have a great patient base, a great population and limited licenses. In Florida, you have to basically depend on yourself in order to succeed. It’s a vertically integrated business, so you have to produce all your own flower and all your own products to sell through your stores, which is something that we’re very good at, and so is AltMed. They’re great cultivators, great at processing, and now, we’ll be able to bring in our best-in-practice SOPs and our additional products and introduce them into that market.
Arizona is also a very well-established medical program. It’s exciting for us to enter that market. Like New Jersey, they just passed adult-use there, which will be implemented next year. It’s attractive for us and seems like an area where we get to bring our products to market, wholesale those across the Arizona industry, and we’ll be looking to increase our footprint there over time on the retail side.
MS: How does this merger fit in with Verano’s overall M&A or expansion strategy?
GA: It really fit into the two states that we wanted to add to our current portfolio. Right now, we’re only looking to add depth within our current footprint, so we’re not necessarily looking to expand into other states—it’s really adding more retail and/or cultivation in the current markets that we’re in. That’s really our M&A strategy today.
MS: How will Verano ultimately integrate AltMed into its existing operations?
GA: The big benefit of AltMed is we don’t really have any duplicative people. Their entire team is staying on board, our team is staying on board, and we’ll integrate as far as making sure our retail and cultivation SOPs are all similar. But the teams are all staying intact. All three founders on the AltMed side are staying on, so it’s a very complimentary transaction.
The MÜV brand will remain within those states. We will be bringing the Verano brand and products and flower into those markets over the next few quarters. It takes time to make that happen. But MÜV will stay intact in those states, and we will be bringing some of the MÜV products into our current footprint. [AltMed has] some very unique items in their portfolio of products that we can bring to some of our medical states.
MS: What are some of Verano’s shorter- and longer-term goals looking ahead?
GA: It’s really to keep doing what we’ve been doing. We’re going to continue to scale in the markets that we’re in. We’re going to continue to build on our cultivation and processing capacity. We’ll continue to build on our retail footprint. We have quite a few stores planned between both companies, so it’s really just executing on our operational strategy.
Editor’s Note: This interview has been edited for style, length and clarity.