CHICAGO -- Grassroots Cannabis is set to be acquired for $875 million, becoming the latest Chicago-based marijuana company to draw a blockbuster price tag from an out-of-state operator.
Curaleaf Holdings, based in Massachusetts, announced Wednesday morning its plan to acquire Grassroots.
The acquisition will allow Curaleaf to expand its presence into states where it does not already operate, including Illinois. Grassroots operates a cultivation facility in Litchfield, Ill., and has affiliations with eight dispensaries around the state.
For Grassroots, the deal means a farther reach into states on the East Coast, such as New York, New Jersey, Massachusetts and Florida, where Curaleaf has focused growth, said Grassroots co-founder and CEO Mitch Kahn. Grassroots operates in 11 states, and Curaleaf in 12. Combined, they will be in 19 states.
"The places we overlap are very minimal, so this really is kind of a perfect match from an asset perspective," Kahn said.
The deal is expected to take six to 12 months to close, Kahn said. It comes as Illinois prepares for recreational marijuana sales, set to begin Jan. 1.
The Illinois marijuana market is expected to reach $1.3 billion by 2023, rivaling Colorado's, according to data from Chicago-based cannabis research firm Brightfield Group. Overall, U.S. cannabis sales are expected to reach $22.7 billion by 2023, including $16.8 billion in recreational sales.
As such, Illinois has become a main target as marijuana companies go on buying sprees to establish themselves as national contenders in the industry.
Grassroot's deal is the most recent in a trend of Illinois cannabis company acquisitions nearing the $1 billion mark.
Earlier this year, a company based in Phoenix agreed to pay $850 million for Chicago-based cannabis operator Verano Holdings. Last year, national operator MedMen entered into a deal to buy Chicago-based PharmaCann for about $680 million. On the flip side, Chicago-based Cresco Labs acquired cannabis distribution Origin House in California for about $850 million.
Grassroots employs roughly 525 people around the country, more than 200 of whom are in Illinois. Kahn said the employee count will continue growing through the acquisition, and expects to employ 800 to 900 people by the end of the year.
The company will also continue expanding its operations in Illinois in preparation for recreational sales, Kahn said. Grassroots raised $90 million earlier this year to help fund further development of its cultivation facility in Litchfield, as well as growth in other states.
Under the new law, the 17 companies that grow medical marijuana will be allowed to supply cannabis for recreational sales as well. The state's 55 dispensaries may also apply to sell to recreational customers, and to open a second location.
Kahn will remain CEO of Grassroots until the deal closes, and he will take a seat on Curaleaf's board, he said.
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