Cannabis multistate operator Vireo Growth’s latest pickups in its ongoing buying spree are seeing the company look beyond plant-touching marijuana companies and into real estate and agriculture technology.
On Tuesday, the Minneapolis-based MSO announced the $88.5 million purchase of its New York cultivation and production complex. That came on the heels of a $40 million acquisition of an Oregon-based food and ag-supply company announced Monday.
According to a company news release, Vireo acquired a 390,000-square-foot property in Perth, NY from its landlord, San Diego-based real estate investment trust (REIT) Innovative Industrial Properties.
The deal was financed with a $49 million seller note from IIP at 15% interest and a $41 million loan from Chicago Atlantic Financial Services, the company said.
Is Vireo building a broader cannabis platform?
The day before, Vireo said it plans to acquire Bridgewell Agribusiness, a supplier of organic and non-GMO food as well as agricultural products such as soil and fertilizer in a deal valued at $40 million, according to a company news release.
After assuming $30 million of Bridgewell’s debt, the deal’s closing purchase price is expected to be about $10.3 million.
Vireo has been on a buying spree this year that includes at least three firms that are not plant-touching.
Bridgewell is the second ancillary company Vireo will acquire this year.
In January, the company announced it would acquire The Hawthorne Gardening Co., the cannabis-oriented subsidiary of lawn and garden giant Scotts Miracle-Grow Co.
And in a deal that positions it to become the third-largest cannabis operator in medical-only Florida, the company will pick up dozens of permits when its acquisition of Tampa-based Fluent closes.
What does IIP’s latest filing reveal about cannabis tenant stress?
Vireos’s New York real estate purchase comes at a significant moment for IIP, one of the cannabis industry’s best-known landlords.
In its latest quarterly filing, the real estate investment trust disclosed ongoing tenant distress and lease churn tied to several cannabis operators.
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The company’s biggest tenant a year ago was Chicago-based PharmaCann with 11 properties under lease, but that MSO has defaulted on seven properties totaling 364,000 square feet at $29.1 million in annual base rent.
“PharmaCann has paid, and continues to pay, full rent on the remaining four retail properties in Colorado,” the company said in a quarterly earnings statement earlier this month.
And another complication appeared in February in the form of a U.S. Securities and Exchange Commission (SEC) investigation, according to the company.
On Feb. 13, the SEC subpoenaed IIP to request documents as part of a “formal investigation… concerning matters generally similar to those alleged” in an earlier, still-pending class-action lawsuit filed by investors who allege the company misled them, according to filings.
IIP “intends to cooperate fully with the SEC,” the company said in filings.
