USA – RIV Capital, Inc. has announced that it is poised to acquire Etain, a medical marijuana retailer in New York, for US$247 million, as it bets on New York becoming a top marijuana market in the world, Reuters reports.
The Toronto-based company, formerly known as Canopy Rivers, says the purchase price for New York-based Etain will be US$212 million in cash and approximately US$35 million in Class A common shares in RIV Capital.
New York legalized recreational marijuana use in March of last year, and it is on track to overtake California as the largest legal weed market.
In addition to Colorado, seventeen other states have legalized recreational marijuana, all in defiance of federal law.
When licenses to open recreational marijuana stores in New York are issued later this year, Etain and nine other companies with medical marijuana licenses in the state will be best positioned to benefit.
The transaction is being financed in part by a subsidiary of Scotts Miracle-Gro, and when it is completed, Etain’s owners will own approximately 16% of the company’s issued and outstanding Class A common shares.
According to RIV Capital, Etain is a woman-owned and operated company that was one of the state’s first five medical cannabis license recipients and currently operates four dispensaries.
Etain, a family-run business founded in 2015, cultivates, processes, distributes, and sells medical marijuana through four retail locations in New York. Its current offerings include wellness oils, oral sprays, and vape pens.
RIV Capital intends to put more money and resources into four new Etain dispensaries, as well as support the construction of a new flagship indoor cultivation facility aimed at the premium market.
The transaction is expected to close in the second quarter of 2022, subject to regulatory approvals.
RIV received a US$150 million investment from gardening company Scotts Miracle-Gro’s cannabis arm after splitting with Canopy in 2020, which it plans to use to finance the cash portion of the deal.
RIV Capital also named Mark Sims, the former Scotts Miracle-Gro head of dealmaking, as the company’s new CEO, succeeding Narbé Alexandrian.
According to Sims, RIV has the capacity to expand to eight stores, three of which will be adult use facilities or dispensaries.
“The New York market is prone to be one of the top markets in the country. Things that happen in New York can impact the tri-state area as well as the rest of the country from a branding perspective,” he added.
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