By John Schroyer
One of Colorado’s biggest cannabis chains just got a little bigger.
LivWell Enlightened Health, formerly known simply as LivWell, announced on Tuesday that it has acquired two new licensed storefronts and a 22,000-square-foot cultivation site from iVita, a smaller operator that retained a single storefront in Denver. The two shops began operating as LivWell stores on Wednesday after having their front signs changed out on Tuesday.
The acquisition brings LivWell’s total number of shops to 13, making it easily one of the largest chains in the state. One of its competitors, Native Roots, has 14 stores across the state, and several other companies have around a dozen shops.
And LivWell is just getting started, said CEO John Lord.
“We’ll be making probably three or four further announcements this quarter… both on organic growth and acquisitions,” Lord said. “Our plan is to spread out more around the state.”
Both of the new shops, located in central Denver, will sell both medical and recreational cannabis, and the new cultivation site will add further capacity to LivWell’s nearly 140,000-square-foot grow site on the north side of the city. LivWell will also be absorbing about 100 employees from iVita, basically ensuring a seamless transition, Lord said. The terms of the deal were not disclosed.
With this acquisition, LivWell is poised to solidify its position as one of the largest players in the entire state.
“Several of our stores are very high capacity stores. There could well be other companies – and I simply don’t know – that have more locations, but probably not with the volume that most of our stores produce,” Lord said. “Some of our retail footprints are over 7,000 feet for a single retail location.”
LivWell is also planning some big moves for Oregon, specifically because it likes the business climate in the state and its regulations for the industry. Part of what makes it attractive, said Lord, is that it allows for out-of-state ownership of cannabis businesses, unlike Colorado and many other states.
Lord said his company is planning on building up a “significant presence” in Oregon, and possibly other states as the marijuana trade grows and other states (hopefully) begin allowing existing companies to spread more easily across the country.
That doesn’t mean that Lord is sitting atop a mountain of marijuana in Colorado; there are still hundreds of other licensed businesses, including growers, retailers, infused product manufacturers, and others.
Consultant Jay Czarkowski, of Canna Advisors, predicted that the future industry won’t be dominated by a handful of companies, as some think it will, but that there will always be niches for boutique growers and retailers.
“It’ll be just like any other industry. How many Arby’s or Ruby Tuesdays or chains like that have hundreds of stores?” Czarkowski said. “There’s going to be chains and one-off shops. There’ll be different levels of customer experience, there’ll be different levels of product quality. There’s always going to be room for everyone.”
Czarkowski also noted that LivWell has had at least one significant problem in the recent past: a lawsuit by two former customers over alleged banned pesticide use in its cultivation facility.
But that growing number of storefronts does have LivWell established as a force to be reckoned with in coming years, as consolidation continues in the industry.
Founded in 2009, only three or four of the storefronts LivWell now owns were started by Lord’s company. The rest were acquired as distressed businesses, or from owners who simply decided that remaining in compliance with complex state and local ordinances was too much of a headache.
“It’s not so much competition causing consolidation, but I feel that it’s actually more driven by the weight of compliance,” Lord said.
That was what he heard from iVita, he said, on why the company decided to sell a majority of its assets to LivWell. And he’s heard the same from plenty of other businesses that he’s acquired over the years.
“This is not a get-rich-quick plan. It’s a huge amount of work, effort and investment,” Lord said. “People are exhausted.”
His own team includes 40 employees that spend their entire time on compliance and making sure that LivWell is up to speed on all the latest industry rules, which Lord said seem to change almost weekly in Colorado.
That puts a huge burden on smaller operators, he said, and many wind up choosing to exit instead of deal with the obstacles.
“To ask a mom and pop to deal with that kind of thing is a huge request,” Lord said.
John Schroyer can be reached at [email protected]