Verano Closes Acquisition of Arizona, Virginia Subsidiaries of The Cannabist Co.

CHICAGO, Aug. 22, 2024 – PRESS RELEASE – Verano Holdings Corp., a leading multistate cannabis company, announced the closing of acquisitions pursuant to agreements previously announced on July 29, 2024, and acquired all of the ownership interests of three subsidiaries of The Cannabist Co. Holdings Inc., one of the most experienced cultivators, manufacturers and retailers of cannabis products in the U.S.

Two subsidiaries, 203 Organix LLC and Salubrious Wellness Center Inc. (together, the “Arizona operations”) operate in Arizona, and the third subsidiary, Columbia Care Eastern Virginia LLC, operates in Virginia (the “Virginia operations”).

In Virginia, Verano will be the sole vertical cannabis operator in Health Service Area (HAS) 5 in eastern Virginia—a region with nearly 2 million residents and 14 million annual tourists—and gains an active cultivation and production facility and six operational dispensaries in Hampton, Norfolk, Portsmouth, Suffolk, Virginia Beach and Williamsburg.

In Arizona, Verano gains an active cultivation and production facility and raises the company’s retail footprint to eight locations with the addition of stores in Tempe and Prescott, complementing its existing six Zen Leaf dispensaries and multiple cultivation and processing facilities in the state.

Verano Management Commentary

“Our entrance into Virginia provides near-term growth potential within the existing medical program and adds yet another valuable market to our footprint with a high probability of adult use in the near future,” Verano founder, Chairman and CEO George Archos said. “Leveraging our extensive M&A history and experience, we are actively integrating these facilities into our network, and will build on our legacy as a top-tier medical operator in preparation for potential adult use in Virginia. Additionally, expanding our Arizona operations allows us to further scale our retail footprint and broaden access to our award-winning brand portfolio with increased cultivation capacity and high-performing dispensaries in attractive locations in Prescott and Tempe. We are thankful for the Cannabist team’s partnership, and thrilled to welcome new colleagues in Virginia and Arizona as we turn the page on an exciting new chapter for Verano.”

The Cannabist Co. Management Commentary

“Verano has been a great partner through a very thoughtful transaction, and we are excited for what the future holds for our eastern Virginia and Arizona teams with Verano,” The Cannabist Co. CEO David Hart said. “This was a critical move for us as we continue our path of building a better business and reshaping our footprint to improve our financial footing, ultimately bringing us closer to profitability. We look forward to working alongside Verano in Virginia as we continue in the Richmond region to support a growing medical program and look toward the future of adult use. Thank you to everyone involved for making this a success.”

The Cannabist Co. will maintain its Virginia operations in the Richmond region (HSA 4), with approximately 80,000 square feet of cultivation and manufacturing capacity, five retail locations in operation and one in development. With the close of the Arizona transaction, The Cannabist Co. now operates in 14 markets, which will be reduced to 12 markets once the exits in Florida and Washington, D.C., are finalized.

Transaction Highlights

Total consideration for the Arizona operations was $15 million in the aggregate, subject to adjustment, paid in cash upon signing. Total consideration for the Virginia operations, subject to adjustment, was $90 million, which was paid upon closing and consisted of $20 million in cash, $40 million in Class A subordinate voting shares, and the issuance of a $30 million promissory note.