Weeks after closing down the majority of its operations in three key legacy markets, Curaleaf announced March 29 an expansion in Utah via a definitive agreement to acquire Deseret Wellness.
The roughly $20-million cash and stock transaction will quadruple the multistate operator’s retail footprint to four dispensaries in the Beehive State and 150 dispensaries nationwide.
Deseret Wellness is currently Utah’s largest medical cannabis retailer, with dispensaries in Park City, Provo and Payson, which combine for a $14-million annualized revenue run rate, according to a Curaleaf press release. Curaleaf’s retail footprint in Utah includes one dispensary in Lehi.
Boris Jordan, executive chairman at Curaleaf, called the transaction with Deseret “historic.”
“We are pleased to continue Curaleaf’s expansion in Utah with the acquisition of Deseret Wellness,” he said in the release. “This deal represents the largest cannabis retail change of ownership in the state’s history and bolsters our strong position in the market with an attractive portfolio of retail assets. On behalf of the board of directors and management team, I look forward to welcoming Deseret to the Curaleaf family.”
The acquisition news comes on the heels of Curaleaf’s decision to close most of its operations in California, Colorado and Oregon, beginning in January 2023, as part of a continued effort to streamline business. In 2022, year-over-year cannabis sales figures plummeted 21% in Colorado, 16% in Oregon and 8% in California amidst market corrections from a COVID-related boom in late 2020 and throughout much of 2021.
But those three states represent legacy adult-use markets.
After Utah voters approved medical cannabis in November 2018, the state launched commercial sales in March 2020. Now, 15 dispensaries serve patients in a state of 3.4 million people, according to the Utah Department of Health and Human Services (DHHS).
One of the fastest-growing medical markets in the nation, Utah’s active cannabis patient numbers increased 51% in 2022 and included more than 65,000 registered patients in February 2023, according to the DHHS Center for Medical Cannabis. That growth translated to nearly $119 million in statewide sales in 2022, a 59% year-over-year increase, with vape cartridges and pens making up the largest segment of the market (over flower) regarding dollar figures.
Upon Curaleaf’s acquisition of Deseret, which executives expect to close imminently upon meeting certain customary conditions, the company will represent more than one-quarter of the state’s retail operations.
Curaleaf CEO Matt Darin said he’s looking forward to fortifying the company’s competitive position in the state market.
“Utah is an important emerging market for Curaleaf, and we are excited to expand our medical retail footprint in the state,” he said in the release. “Deseret shares Curaleaf’s mission of expanding access to high-quality, tested and regulated cannabis products while providing patients with superior service. Deseret has built a strong and profitable business, and we believe the combination of our two companies will enhance our competitive position in the Utah market.”
