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Cronos Takes 10% Stake in PharmaCann for $110 Million, Gaining U.S. Foothold

June 22, 2021

Toronto-based cannabis producer Cronos Group has entered an agreement to acquire a share of Chicago-based PharmaCann, giving the Canadian producer a foothold in the U.S. market. PharmaCann has grown into a notable midsize cannabis player, with a presence in New York, Illinois, Ohio, Maryland, Pennsylvania, and Massachusetts. It operates six production facilities and 23 dispensaries under the Verilife brand. This footprint positions Cronos well for the emerging East Coast market.

Under the terms of the arrangement, Cronos will take an ownership stake of about 10.5% in PharmaCann for approximately $110.4 million in an all cash transaction. The companies will also have the option to offer their products through the other’s distribution channels, allowing Cronos to begin introducing U.S. consumers to its suite of brands including adult-use labels Cove and Spinach. Following the use of this option, Cronos will also have certain governance rights at PharmaCann, allotting it a seat on its board or perhaps a board observer.

“Our U.S. growth strategy focuses on delivering long term shareholder value by assembling a best-in-class brand and intellectual property portfolio and positioning to deploy our products in the U.S. market,” said Kurt Schmidt, president and CEO of Cronos Group. “We were attracted to PharmaCann as an investment because of their disciplined capital allocation, strong track-record, and compelling licensed manufacturing and retail footprint.” Ste. Michelle Wine Estates parent Altria holds a 45% stake in Cronos.—Danny Sullivan

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