Vireo Growth Inc. has announced a series of transactions, including a $75 million equity securities offering and the acquisition of four single-state cannabis operators.
The equity securities offering is priced at $0.625 per subordinate voting share, with the closing subject to applicable notice periods, according to a press release sent today.
The acquisitions, collectively referred to as the “Merger Transactions,” are valued at approximately $397 million in all-stock deals. Upon completion, Vireo’s operational footprint will expand to include Florida, Missouri, Nevada, and Utah, bringing the company’s total reach to seven states. The combined entity will oversee approximately 1,043,500 square feet of cultivation and manufacturing space across nine facilities and operate 48 retail dispensaries.
The company has entered into definitive agreements to acquire Proper Brands in Missouri, Deep Roots Harvest in Nevada, and WholesomeCo Cannabis in Utah. Additionally, Vireo has signed a binding Memorandum of Understanding (MOU) to acquire The Flowery in Florida. These transactions will also introduce the Arches proprietary cannabis delivery and analytics platform, which will be licensed exclusively to Vireo’s portfolio companies as regulations permit.
Proforma revenue for the combined entity is projected to reach $394 million in 2024, with an estimated EBITDA of $94 million. Following the transactions, Vireo expects to maintain a strong balance sheet with $99 million in cash and $78 million in net debt, resulting in an EBITDA leverage ratio of 0.8x, which the company believes is one of the best among its peers.
John Mazarakis, co-founder of Chicago Atlantic, has been appointed CEO and Co-Executive Chairman, while Tyson Macdonald, formerly of TrueRise Capital, has been named CFO. Amber Shimpa will continue as President and CEO of operations in Minnesota, Maryland, and New York. Co-Executive Chairman Kyle Kingsley, MD, expressed enthusiasm for the acquisitions, stating, “These transactions will transform our balance sheet, position us to capitalize on new competitive strengths, and deliver long-term value for all stakeholders.”
John Mazarakis added, “We’re proud to unveil a new strategy focused on a decentralized approach, empowering local expertise while providing shared corporate services and the Arches technology platform to capture incremental market share.”
Proper Brands, one of Missouri’s leading independent operators, will add 11 retail dispensaries and significant cultivation capacity to Vireo’s portfolio. The company plans to implement the Arches delivery platform in early 2025 to enhance its market penetration. Deep Roots Harvest, a strong player in Nevada’s cannabis market, brings nine active dispensaries and plans for further expansion, alongside equity stakes in operators in California, Ohio, and Massachusetts. WholesomeCo Cannabis, a dominant force in Utah’s medical marijuana sector, operates a robust delivery service covering 99% of the state’s medical patient population. Florida’s The Flowery, known for its premium products and delivery service, will contribute 10 dispensaries, with plans to increase to 14 by 2025.
The Arches platform, developed by WholesomeCo in 2023, provides advanced e-commerce and delivery capabilities. It will be integrated into other state markets starting with Proper Brands in Missouri in 2025. Arches aims to improve unit economics across channels, offering personalized digital experiences for customers.
The transactions are structured as all-stock deals with earnout provisions based on performance through December 31, 2026. Lock-up agreements will prevent the sale of shares by sellers for 33 months post-closing, with staggered release schedules. Vireo shareholders will hold approximately 21% of the combined company’s shares, while the sellers and new investors will hold 68% and 11%, respectively, on a fully diluted basis.
The deals have been unanimously approved by Vireo’s board and the boards of the acquired companies. Closing is expected to take at least six months, pending shareholder and regulatory approvals. Moelis & Company LLC served as the exclusive financial advisor, and Dorsey & Whitney LLP acted as legal counsel for Vireo.
