California Remains Essential Jurisdiction for Top Multi-State Cannabis and Hemp Operators

California continues to dominate as the largest legal cannabis market in the world. As new jurisdictions open up, with Illinois recently passing adult-use legislation and New Jersey and New York possibly in 2020, California remains an integral piece for a multitude of multi-state operators (MSOs) such as Jushi Holdings Inc. (NEO:JUSH.B) Cresco Labs Inc. (CSE:CL) (OTC:GGBXF), Curaleaf Holdings, Inc. (CSE:CURA) (OTC:CURLF), Green Thumb Industries Inc. (CSE:GTII) (OTC:GTBIF), and Acreage Holdings, Inc. (CSE:ACRG.U) (OTC:ACRGF).

The latest player to zero in on California’s market leading customer base, is globally-focused multi-state cannabis and hemp operator, Jushi Holdings Inc. (NEO:JUSH.B) (“Jushi”)—which celebrated the 4th of July by announcing an agreement to acquire its first operational adult-use and medicinal dispensary in San Diego, one of four high profile retail locations in California.

 “The California market is a core part of our growth strategy with a very sizable addressable market that, to put in perspective, is larger than Canada,” said Jushi CEO and Chairman, Jim Cacioppo. 

With nearly 40 million residents, California has the longest-running medical cannabis program in the USA. By zeroing in on San Diego, which has the second largest city in California, Jushi is successfully and strategically entering a limited license market with a maximum of 36 total retail cannabis licenses divided among 9 council districts. To date, 19 retail cannabis licenses have been issued in the city, 17 of which are operational. Given that the city has 1.4 million residents, and welcomes over 35 million visitors per year, the entry is a textbook elite tier asset for an MSO such as Jushi.


Not all MSOs begin their launch in California. While the Golden State is seemingly essential to any multi-state portfolio, companies with national aspirations need to be assembling their assets elsewhere while the right opportunity formalizes in California.

Since its launch, Jushi has wasted no time in quickly expanding its national footprint, both in dispensaries, and in rolling out its product line. Led by a team that includes a highly skilled expert distressed investor and a former Vice Chairman of Deutsche Bank, Jushi in a very short time has accrued a market cap of over CAD$250 million and is assembling a respectable portfolio of multi-state assets.

In New York, Jushi opened its first store for its Mend line. This first Mend store, located in Amherst, NY, deals in full-spectrum CBD products, including physician-formulated phytocannabinoid-rich oils derived from top quality hemp plants for promoting restful sleep, relaxation, and general well being. The initial product line consists of tinctures, soft gel caps, and topical lotions, with a unique Swiss-made, hemp-derived CBD lozenge in the works.

Jushi also received New York state approval of its industrial hemp-CBD processor license application as part of the New York State Industrial Hemp Agricultural Research program, administered by the New York State Department of Agriculture and Markets. The project is being carried out by Jushi’s subsidiary, Sound Wellness LLC, whose hemp-CBD processor license supports Jushi’s initiative to create product innovations centered around the untapped potentials of hemp. Jushi is currently in negotiations with approved farmers in New York for the purchase of enough hemp to fuel its operations in late 2019 and 2020.

In Pennsylvania, Jushi recently closed an acquisition to acquire a medical marijuana dispensary operator. Under the agreement, Jushi is set to acquire all of the membership interests of a phase I medical dispensary permit holder in Pennsylvania under the Medical Marijuana Program (MMP) overseen by the Pennsylvania Department of Health, and all of the membership interests of three provisional Phase II Medical Marijuana Dispensary Permit holders under the MMP. Jushi’s official entry to Pennsylvania is coupled with recent favorable market developments, as an update this week to the medical program in Pennsylvania will include anxiety and Tourette's syndrome on the list of qualifying conditions, effective July 21.

Last month, Jushi closed an acquisition of intellectual property from The Clinic Consulting ServicesTM, The BankTM and The LabTM (with its award-winning operations team). The Clinic came with trademarks, trade secrets and other proprietary intellectual information related to cannabis brands, while The Bank owns IP pertaining to cultivation and genetics of over 150 different strains, and The Lab’s IP pertains to proprietary concentrates and extraction techniques.

Last week, the company announced the expansion of its presence into the Northeastern US through the acquisition of a Virginia-based pharmaceutical processor for medical cannabis extracts. Jushi is set to acquire the majority membership interests in Dalitso LLC—which is currently one of only five applicants to receive conditional approval for a permit issued by the Virginia Board of Pharmacy to cultivate and process medical cannabis, and to dispense and deliver CBD oil and THC-A oil extracts in the state. Moving forward, Jushi is developing a facility in Prince William County near the City of Manassas.

“As we expand our geographic footprint, we are committed to making the highest quality investments and entering into the highest quality partnerships in the most ideal locations,” said Jushi CEO and Chairman, Jim Cacioppo. “We look forward to working closely with the Dalitso team to develop high quality medical cannabis products for the patients of Northern Virginia.”

Coupled with its proven management team that includes CEO and Chairman Jim Cacioppo, who has more than 20 years of managing businesses and allocating capital, and President Erich Mauff, who spent over 20 years at Deutsche Bank, last serving as Managing Director and Vice Chairman of Corporate Finance North America.

As Jushi continues its growth momentum and broadens its geographical footprint, another big splash is the entry into San Diego, giving the company its first operating adult-use location in the largest cannabis market in the country. Jushi’s partners in San Diego have successfully built a loyal customer base, which offers consumers a wide variety of high-quality products. The main store is easily accessible off the highway and offers a well-located springboard for future delivery to San Diego and neighboring cities. Jushi views this partnership as one of many sought by the company throughout California and, together with previously announced transactions, pending applications, and future expansion in the state. 


Cresco Labs Inc. (CSE:CL) (OTC:GGBXF)

As its $1.1 billion acquisition of Origin House continues to move forward despite delays, Cresco Labs is making a push to be a leading player in California. Cresco currently owns 80% of a cultivation operation in the state that’s reported to be capable of producing 182,000 pounds per year. However, the market continues to keep its eyes on each development and update coming out that involves the Origin House deal. Both companies are highly complementary, with very few areas of overlap.

Curaleaf Holdings, Inc. (CSE:CURA) (OTC:CURLF)

Back in February, Curaleaf acquired Eureka Investment Partners, giving the company access to California’s wholesale market. The assets involved included an existing 110,000 sq ft greenhouse facility in Salinas, California, with the potential to expand up to 270,000 sq ft that could generate over 50,000 lbs of dry flower per year at full scale. Curaleaf further ramped up its California potential through a $1 billion acquisition of Cura Partners in Oregon, that supplies approximately 900 retailers with its “Select” brand of cannabis oil. Roughly half of its retailers are in California.

Green Thumb Industries Inc. (CSE:GTII) (OTC:GTBIF)

Among Green Thumb’s wide portfolio of assets, is the recently acquired Beboe branded products, out of California, which are available in more than 125 retail locations in California and Colorado. Beboe is also associated with the opening of the luxury cannabis store “The High End”, owned and operated by Barney’s New York. Last month, GTI also closed a $290 million acquisition of Nevada’s Integral Associates, which gives a production and retail footprint in the lucrative Las Vegas market, while also allowing GTI to enter California with a flagship retail location.

Acreage Holdings, Inc. (CSE:ACRG.U) (OTC:ACRGF)

One of the largest MSOs in the entire cannabis sector, Acreage Holdings is nearing its exit strategy—possibly. Acreage agreed to be acquired by cannabis behemoth Canopy Growth for $3.4 billion in a contingent rights deal. The deal is contingent on the US legalizing marijuana at the federal level, which could still be many, many years off from happening. Acreage entered California through its own acquisitions, which includes a pending deal to acquire Oakland dispensary Kanna for $11.5 million in stock. It has also purchased Form Factory, a manufacturer, co-packer and distributor based in Oregon that is expanding to California.

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