‘Big Marijuana’ enters South Jersey as politically connected Acreage buys nonprofit
Neither Acreage or nor the Compassionate Care Foundation revealed details about the deal.
Acreage Holdings, the politically connected cannabis behemoth, is buying a South Jersey medical marijuana cultivator and retailer.
The arrangement will formalize a two-year relationship between the New York-based Acreage and Compassionate Care Foundation (CCF) of Egg Harbor.
In 2017, Acreage partnered with the foundation, one of the original six medical marijuana “Alternative Treatment Centers” created in New Jersey during Gov. Jon S. Corzine’s administration.
Last year, Acreage bought a 135,000-square-foot former orchid greenhouse in Sewell to convert it into the largest weed cultivation facility on the East Coast.
On Monday, Acreage said it was buying “100% of the equity interests in CCF” in anticipation of the Garden State’s efforts to legalize marijuana for adult recreational use. It’s unclear how it will work, as the foundation is a nonprofit.
“Acreage will acquire 54% of the equity interests of [Compassionate Care Foundation] in exchange for the conversion of an existing convertible note and 46% in exchange for $10,000,000, payable in cash or stock at the option of CCF,” said Bob Daino, Acreage’s chief operating officer.
The foundation operates a grow facility and retail outlet in a former Trump Casino warehouse just outside of Atlantic City in Egg Harbor. It currently “has the potential to operate" a total of three dispensaries, according to a statement released by Acreage.
A satellite retail facility under Acreage’s the Botanist brand is under construction in Atlantic City and is expected to open in December if regulators approve, Acreage CEO Kevin Murphy said in an earnings call last week. The foundation signed a letter of intent this year to open another Botanist store in Williamstown.
Though political differences have put recreational marijuana on hold in New Jersey, the governor is planning a rapid expansion of the medical program.
Acreage, one of the biggest marijuana companies in America, operates properties in 20 states. In Pennsylvania, it grows and sells cannabis to dispensaries under the Prime brand. Murphy, who is no relation to N.J.'s Gov. Phil Murphy, said he was optimistic that Pennsylvania would legalize marijuana for recreational use.
“[It’s] not a matter of ifs, but when it will happen for the entire region,” CEO Murphy said, “and we believe it is coming soon.”
Acreage Holdings this year said it had agreed to be purchased by Canadian weed giant Canopy Growth if the United States ever legalizes marijuana for recreational use. In an earnings call last week, the CEO said the company would be launching Canopy Growth’s Tweed brand of medical marijuana products “in the next month or so” in Oregon, Maine, and Massachusetts.
Acreage has amassed formidable political clout: On Acreage’s board of directors are former U.S. Rep. John Boehner, former Massachusetts Gov. Bill Weld, and former Canadian Prime Minister Brian Mulroney.
In January, Acreage hired Philip Norcross, the CEO of law firm Parker McCay and brother of South Jersey powerbroker George Norcross and U.S. Rep. Donald Norcross (D., N.J.). Philip Norcross’ lobbying firm, Optimus Partners, provides “consulting services” for the company, according to an NJ.com report.
Last week, Acreage Holdings reported third-quarter revenue of $22.4 million, a 307% increase compared with the same period in 2018. At the same time the holding company reported a net loss attributable to Acreage of $39.9 million.
Acreage stock has been trounced this year, falling from a 52-week peak of $28.30. It closed Monday on the Canadian exchanges at $4.48 (U.S.), up about 6%.