Michigan’s MCP Wellness selling to SOL Global in $150m buyout

Michigan firm MCP Wellness, Inc. is being acquired for US $150m by SOL Global Investments Corp.

MCP Wellness is currently owned by cannabis-focused private equity firm Merida Capital Partners.

SOL is the owner of 3 Boys Farms, LLC, which holds one of Florida’s original 14 operating and vertically integrated medical marijuana treatment center licenses.

The two companies inked an acquisition agreement on April 23.

MCP Wellness, a special-purpose vehicle (SPV) created to invest in Michigan cannabis operations, currently holds the rights to acquire two Michigan cultivation licenses, a processing license, and three fully licensed cannabis provisioning centers in Michigan with a fourth provisioning center scheduled to open in Ann Arbor in May.

MCP Wellness also has plans to open an additional nine municipally-approved provisioning centers by August 2019.

Assuming MCP Wellness’ expansion plans are completed as scheduled, SOL Global and Merida expect Michigan gross revenue from the acquired business to generate in excess of US$61 million in calendar year 2019 and more than US$121 million in 2020.

The acquisition, which is subject to the negotiation and execution of a definitive purchase agreement and regulatory approval for the transfer of licenses within Michigan, is expected to close in May 2019.

SOL Global owns 3 Boys through its wholly-owned subsidiary, CannCure Investments Inc.

Following the closing of the acquisition, SOL Global intends to combine the acquired Michigan business into CannCure to form a new multi-state operator.

Under the terms of the LOI, the purchase price will be satisfied by way of US$35 million in cash and US$115 million in equity consideration in CannCure, resulting in Merida owning approximately 42% of CannCure.

“MCP Wellness’s acquisition of the Michigan licenses, once completed, will be the perfect complement to 3 Boys’ operations in Florida, as both states offer tremendous growth potential and this partnership will combine talent, industry leading genetics and processing, plus cultivation and retail expertise across two of the most coveted and revenue generating markets in the U.S.” said Brady Cobb, CEO of SOL Global.

“This acquisition will help ensure that SOL Global, through the MSO, will be able to execute on its visionary vertically integrated cultivation and retail strategies in the United States’ most promising cannabis markets.”

“Over the past several years, Michigan has become one of the country’s largest medical cannabis markets, projected at nearly US$900 million for 2019, according to New Frontier Data,” said Mitch Baruchowitz, managing partner of Merida Capital Partners.

“With adult use coming in 2020, Merida is excited by the opportunity to combine one of Michigan’s leading retail operations with a Florida operator while aggressively pursuing additional acquisition targets across several states that will help create a more diversified company.”Cannabis Business Worldwide

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