VANCOUVER – FlyOnWallStreet – The world’s biggest cannabis company by revenue, Tilray, Inc. (NASDAQ:TLRY) (TSX:TLRY), just announced its acquisition of a majority stake in American cannabis retailer MedMen Enterprises Inc. (CSE:MMEN) (OTC:MMNFF), signaling another big bet on US legalization. The $165.8-million deal caused early-market trading to breach +40% gains for MedMen, before settling into a closing gain of +20%. The move sparked further investor interest in already-established US markets such as California and Nevada, as well as rising markets such as Michigan, which again posted record-breaking sales in July. Producers seeking an early footprint have already noticed the potential of these markets, such as Pure Extracts Technologies Corp. (OTC:PRXTF) (CSE:PULL) (XFRA: A2QJAJ), Gage Growth Corp. (CSE:GAGE) (OTC:GAEGF), and Cresco Labs Inc. (OTC:CRLBF) (CSE:CL).
Pure Extracts Technologies Corp. (OTC:PRXTF) (CSE:PULL) (XFRA: A2QJAJ), makers of the established Pure Pulls and Pure Chews brand of extraction-based products, recently announced a definitive agreement with a subsidiary of multi-state operator (MSO) Grown Rogue International Inc. to create a new co-owned company to focus exclusively on cannabis and hemp extraction. This will allow Pure Extracts to bring its world-class extraction capabilities to the fast-growing Michigan market to produce its own brands, expand the MSO’s product offerings and create white label products for other established Michigan cannabis companies.
“We are excited to be teaming up with Grown Rogue, renowned cultivators who have already sold their cannabis products to over 100 dispensaries throughout Michigan, a state where cannabis sales reached a record $171 million in July of this year, up 56% from a year ago,” said Ben Nikolaevsky, CEO of Pure Extracts. “Establishing Pure Extracts’ brands in the United States, the world’s largest and most important cannabis market, is an important milestone for our company.”
The joint venture plans to build-out 2,600 sq ft of existing space in the 80,000 sq ft facility in Bay City, Michigan, in order to produce Pure Extracts’ branded concentrates, cartridges, edibles and tinctures as well as similar items under Grown Rogue’s brand.
"We are excited to expand our product offering in Michigan to include new products that doubles our addressable market in a top 5 cannabis state," said Obie Strickler, CEO of Grown Rogue. "We have consumers that actively seek out the processors who purchase our trim for their own products so this joint venture will help fulfill the increasing demand for Grown Rogue's high-quality products in the state of Michigan, increase the strong brand equity our team is building, and capture additional margin for the company."
Grown Rogue will not only be adding Pure Extracts’ Pure Pulls and Pure Chews to their Michigan product portfolio, but also new concentrates and cartridges to complement their award-winning flower and proprietary, 3.5 gram, nitrogen sealed flower jars that are already one of state’s leading flower brands.
Considerations are being made to potentially build dedicated greenhouse production to provide cheaper processing input for house brands and available white label opportunities.
Michigan’s potential didn’t go unnoticed by one of the cannabis sector’s top entrepreneurs, Bruce Linton, who founded Canopy Growth and currently serves as Executive Chairman for Gage Growth Corp.(CSE:GAGE).
“Michigan is one of the fastest growing cannabis markets in the US,” said Linton who is the former co-CEO and founder of cannabis sector giant Canopy Growth in an interview with Forbes.
Gage recently announced the opening of its 10thprovisioning center in Michigan—a +4,600 sq ft location expected to create +20 new jobs for the Burton, Michigan market, and will carry Gage’s entire selection of products, as well as award-winning Cookies branded offerings that are exclusively available at Gage’s locations.
"Michigan continues to be one of the strongest cannabis markets in the country, and the opening of our 10th store location in the state is further proof of our continued commitment to provide greater access to high-quality cannabis in Michigan," said Fabian Monaco, CEO of Gage. "Our team is excited to serve customers and patients in the Burton area and make a positive impact on the community."
Already with a footprint in Michigan and Illinois, Cresco Labs Inc. (OTC:CRLBF) (CSE:CL) recently also announced more acquisitions of popular dispensaries in Maryland and another in Florida.
Cresco also recently released its Q2 2021 results, exhibiting revenues of $210 million, for an increase of 17.7% quarter-over-quarter and 122.8% year-over-year.
"Q2 was a strong quarter of head down execution at Cresco Labs and once again we are hitting our stride as we enter the next phase of growth. During the quarter we continued to invest in infrastructure, operationalized new assets, and deployed our proven playbook to build top positions in the most important U.S. cannabis markets," said Charles Bachtell, Co-Founder and CEO of Cresco Labs. "We remain dedicated to our differentiated strategy and continue to lay the foundation for long-term leadership in the U.S. cannabis industry."
By making a $165.8 million deal to acquire a 75% majority stake of MedMen Enterprises Inc. (CSE:MMEN) (OTC:MMNFF), Tilray, Inc. (NASDAQ:TLRY) (TSX:TLRY) now has an ideal footprint of its own in the American cannabis retail scene, potentially ahead of long-awaited federal legalization progress.
“What Medmen does for Tilray is that it gives us a great brand,” said Irwin Simon, Tilray’s chairman and CEO. “Ultimately, once legalization happens, it gives us the potential to own a great company that we can ultimately take into the rest of the world.”
MedMen is a leading cannabis retail brand in the U.S., holding 21 licenses and 25 retail locations across key urban centers, including the Bay Area, Los Angeles, Boston, Chicago, and Las Vegas, and a significant position in California, the world’s largest market.
"Backed by accelerating trends towards legalization globally, we are focused on building the world's leading cannabis-focused consumer branded company with a goal of $4 billion of revenue by the end of our fiscal 2024,” added Simon. “The investment we are announcing in MedMen securities, one of the most recognized brands in the $80 billion U.S. cannabis market, is a critical step towards delivering on our objective as we work to enable Tilray to lead the U.S. market when legalization allows."
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