Scotts-backed RIV Capital buys New York marijuana operator Etain for $247M

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A Canadian investment firm bankrolled by a unit of lawn and garden giant Scotts Miracle-Gro agreed to purchase New York-based marijuana company Etain Health for $247 million.

Toronto-based RIV Capital said it signed an agreement to buy the female- and family-owned vertically integrated medical marijuana operator for cash and stock.

The transaction is believed to be the largest involving a female-owned business in the cannabis industry and gives RIV Capital – and, indirectly, Scotts Miracle-Gro – the opportunity to capitalize on the upcoming launch of New York’s adult-use marijuana market.

“This was a creative way for The Scotts Miracle-Gro Company to enter the direct plant touching side of the cannabis industry,” cannabis banking expert Tyler Beuerlein, who is chief business development officer at Arizona-based Hypur, wrote in a LinkedIn post.

RIV Capital is an investment and acquisition firm heavily funded by The Hawthorne Collective, a Scotts Miracle-Gro subsidiary.

The deal comes as RIV Capital also announced that a top Scotts executive, Mark Sims, will become the firm’s new CEO and president.

According to a news release, Sims will “lead the company’s formal entry into the U.S. market and expansion into licensed adult-use operations in New York.”

He previously served as senior vice president of strategy and M&A for Scotts.

“The pending acquisition of the Etain business is the first step in the execution of the RIV Capital strategy, shifting from an investor in the cannabis value chain to a full-fledged operator of licensed cannabis cultivation and dispensary facilities in the U.S.,” Sims said in the release.

Under the terms of the transaction, RIV Capital will pay $212 million in cash and $35 million in stock, based on a five-day average price before the announcement.

RIV Capital said it will use $150 million in proceeds from The Hawthorne Collective to help finance the cash portion of the deal.

The Hawthorne Collective also intends to provide RIV Capital with an additional $40 million around the closing of the acquisition, according to the release.

In another large transaction involving a cannabis business owned by women, New York-based events company Emerald X bought female-owned MJBiz earlier this year for $120 million plus estimated earnouts of $30 million-$50 million.

Etain’s founders – Amy, Hillary and Keeley Peckham – noted in an announcement on the company’s website that they will be integrated into the partnership with RIV as “core leaders in the future of the Etain brand.”

“While the Peckham family will be stepping back from control of the company, we will be actively partnered with RIV Capital on preserving the ethos of the Etain brand and utilizing our combined efforts to continually find and make new spaces for women in cannabis,” Etain Health Chief Operating Officer Hillary Peckham said in a release.

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Etain, one of New York’s original five MMJ operators, has four dispensaries in the state, including a flagship store in Manhattan, and is in the process of expanding its cultivation and production facility in Chestertown.

The company was the only independent remaining among New York’s now 10 medical cannabis businesses. The other nine are multistate operators.

Etain CEO Amy Peckham will join the RIV Capital board of directors.

The acquisition must be approved by the New York Cannabis Control Board and the New York State Office of Cannabis Management.

RIV Capital trades on the Canadian Securities Exchange as RIV and on the U.S. over-the-counter markets as CNPOF.

Scotts Miracle-Gro trades on the New York Stock Exchange as SMG.

Jeff Smith can be reached at jeff.smith@mjbizdaily.com.