Cannabis Specialist Acreage Eyes National Footprint as it Raises $119 million

July 23, 2018

Cannabis specialist Acreage Holdings plans to publicly list common stock through a reverse merger on the Canadian Securities Exchange in the fall after a $119 million Series E funding round from private investors, the New York-based company said Monday.   Including the latest round, Acreage has raised about $225 million in invested capital.   Kevin Murphy, founder and CEO of Acreage Holdings, said the straight equity injection marks the largest privately raised funding round in U.S. cannabis history and will help the company continue its expansion.   The round was oversubscribed and raised in about 10 weeks. Placed internally by executives at Acreage, no bank or law firm was cited on the deal by the firm.   Investors in the E Round received shares in the company that are senior to the shares held by management. This reflects the desire by management to show they have skin in the game and they put their investors first, Murphy said.   “We believe that every one of our investors is our partner,” Murphy said. “Until we list in a public offering, the shares placed in this funding round are structurally senior to my shares and the shares of management. We’re putting our money where our mouth is. We believe in our story.”   Murphy’s comments come just days after the successful IPO of cannabis company Tilray (TLRY) on the Nasdaq on Thursday, July 19.   Acreage currently owns or operates licenses in 13 states and plans to use the proceeds from the round to acquire licenses, brands and other properties, the company said.   The company held a minority position in all states, Murphy said. After the roll up, it will be in a majority position in all but one state.   Murphy said he has been the largest investor in Acreage to date. As founding member and managing partner at Stanfield Capital Partners, he was central in growing the organization from inception to an exit in 2006-2007, according to his biography.

He also has a family office that backed Acreage and made his first investment in cannabis in 2011.

He said he was drawn to the cannabis business to improve compassionate care for patients.   “I believed I could help people help themselves,” he said. “Cannabis will be the silver bullet of medicine for the next 20 or 30 years and beyond.”   After adding ex-House Speaker John Boehner and former Massachusetts Gov. William Weld to board this year — moves that drew attention to Acreage — the company plans to add more board members, but details are pending.   The company is preparing a listing on the CSE through a reverse merger. A shell company has been lined up for the transaction, but no details are yet available on its name.   Including its affiliated units, the company expects to employ 2,000 to 3,000 people in the next six to 12 months as a grower, processor and dispenser of medical and adult use cannabis.   A source familiar with the company said Acreage will post more than $100 million in revenue this year and then grow quickly from there. Murphy declined to comment.   The company may grow from 15 to 20 or 25 states with a consistent brand identify across the company. The brand name of dispensaries will be The Botanist.

“Our goal is to provide a consistent, reliable, and safe product and experience for everyone coming into our dispensaries,” Murphy said. “We are creating a nationwide footprint.”