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Green Thumb Industries Could Dominate Nevada

The company grows its Nevada footprint considerably with two acquisitions.

Photo by Joel Pilger on Unsplash

Chicago marijuana company Green Thumb Industries (CSE: GTII.CN) acquired 2 Nevada-based businesses recently. After scooping up Integral Associates, a Nevada grower and retailer, the company came out with another agreement announced this week.

The first deal came in at $290-million contract for two cultivation and production facilities in the state. GTI’s initial footprint there totaled 95,000 square feet. Moreover, Integral brought the company three retail stores in the Las Vegas Valley. One of those stores is on the Las Vegas Strip, and it was rated Nevada’s #1 dispensary by Business Insider.

“Combined with Green Thumb’s existing operations, closing will give GTII a total of three cultivation/production facilities and five dispensaries in a highly coveted market that delivered $425 million in cannabis sales in the first year following legalization of recreational use, exceeding the state’s projections by approximately 60 per cent,” said Russell Stanley of Beacon Securities.

The deal is expected to close in the first half of 2019. Green Thumb’s management will change as a result. Integral’s CEO and co-founder Armen Yemenidjian was previously Chair and CEO of Tropicana Las Vegas Hotel and Casino. He will come on as GTII’s President.

A second accretive acquisition in Nevada

GTI Industries also announced the company’s largest acquisition to-date this week. The agreement to acquire Integral Associates (“Essence”) for $290 million. GTI will pay $52 million in cash and roughly 21 million in GTII shares.

Essence operates 3 Las Vegas dispensaries, as well as two production facilities totaling 95,000 square feet.

Good deal for GTII shareholders

According to GMP Securities analyst Robert Fagan, the agreement is a good one. He posits the acquisition as an accretive one. That means it should increase GTII’s earnings per share (EPS). Typically in an accretive deal, the company is getting the asset for cheap, and market price tends to go up as a result.

Black Friday deals for GTII

Further, he says GTII could make around 25 percent on the Essence assets. Essence currently has roughly 10 percent retail market share in Nevada. Moreover, the company is recognizable there, with their products on the shelves of around 70 percent of Nevada’s retail stores.

GTII could dominate Nevada

Currently one of Nevada’s principal players, Essence’s store network is well-recognized. The company will add 3 new stores to GTI’s network of stores. Moreover, it gives GTI exposure to Las Vegas, which accounts for around 70 percent of Nevada sales.

Also, acquiring Essence will bring GTI’s combined production area to over 100,000 square feet in Nevada with 3 facilities. That represents the most massive operational production footprint of all the cannabis producers in the state.

The Essence expansion looks to grow GTI’s program and help them get into the established recreational markets

Written by Rob McLean

Rob loves staying on top of developments in the cannabis sector, and always has his finger on the pulse of real estate markets.

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