Colorado, Get Ready For More Consolidated Cannabis

Solace Meds, a private company, began its expansion before the new financial rules take place.
Solace Meds, a private company, began its expansion before the new financial rules take place. Thomas Mitchell
Brian Garret almost tripped as he approached his favorite dispensary, Sticky Buds, on September 3 — and it wasn't because of Denver's lousy sidewalks. Garret's pot shop of choice on Colfax Avenue had a banner hanging out front, announcing new ownership.

"I called the other location [on South Broadway], and they said Solace Meds took over that one, too," he said at the time. "Everything inside was pretty much the same, but things will probably change with time."

Garret, who just wanted to get home for an after-work dab on a hot summer day, probably didn't realize how metaphorical his statement was. Natural market evolution and new state laws allowing out-of-state investors, publicly held companies and more large venture funds to own pot companies have set up Colorado's cannabis field for some big changes late this year.

Proponents of the legislation leading to the new laws said that as more states legalize recreational pot, Colorado had to change its rules so it could offer similar investment opportunities. Smaller business owners were split on the measure. While some mom-and-pops had been waiting for the day when they could sell their brands and business licenses to deep pockets, others viewed the move as a step toward corporate cannabis and consolidation.

As publicly traded companies wait for the new laws to take hold November 1, privately held companies are already on the move. Solace Meds finished the Sticky Buds purchase in September. Over the past few years, two of the state's largest dispensary chains, LivWell and the Green Solution, have each taken over a handful of independent dispensaries throughout Colorado. Lova, a new, privately held cannabis brand, has purchased five metro-area dispensaries this year: both MMJ America dispensaries in Denver (but not the Boulder location), Groundswell Cannabis Boutique, Northern Lights Cannabis Co.'s store in Edgewater and Boulder's Trill Alternatives.

But those deals could seem like a trickle compared to the flood of acquisitions that will start in November, when the new investment regulations take hold. One company alone, Medicine Man Technologies, has announced enough deals to get the entire state high.

Over the past ten months, the Denver-based public cannabis company has agreed to purchase more than thirty dispensaries throughout Colorado. Recently reported deals, none of which can officially take place until November, include agreements to buy all three metro-area Colorado Harvest Company dispensaries, five Starbuds locations statewide and mountain dispensary chain Roots RX's six dispensaries. Medicine Man Technologies also has plans in place to buy over ten more stores through the acquisition of southern Colorado chains Mesa Organics and Strawberry Fields, as well as Medicine Man, a metro-area chain of dispensaries co-owned by Medicine Man Technologies CEO Andy Williams. So far, the company hasn't announced whether the acquired stores will transition into the Medicine Man brand, though the Starbuds change seems likely, as Starbuds still has several stores not included in the purchase as of yet.

Medicine Man Technologies has also announced deals to acquire Colorado cannabis extractors Dabble Extracts and Purplebee's Extracts, as well as cultivation Los Sueños Farms, one of the largest outdoor cannabis-growing operations in the country. Other purchase agreements include research and medical marijuana firm MedPharm Holdings and Colombian medical marijuana licensee Green Equity. To top it off, the company also agreed to buy Medically Correct, the original parent company of Incredibles edibles, Incredibles extracts and several other infused-product companies created by founder Bob Eschino — but the Incredibles brand was not included in the purchase.

The deals are enough to make your eyes scroll like a cartoon slot machine. Come November 1, all of those brands will be owned by one company — though it's important to note that the majority of their founders and CEOs plan to stay on with Medicine Man Technologies.

Despite the company's publicly ravenous appetite, other instrumental players in Colorado's cannabis space have remained largely quiet. In September, Jeff Mascio, CEO of the Joint dispensary's parent company, Cannabis One, said that his company had quite a few deals slated, but he couldn't talk about them yet.

"Anything announced now can't officially take place until the rule changes," he noted, "but those who are taking the risk of being early will probably be rewarded."

Medicine Man Technologies is certainly willing to take the risk. After all, since Governor Jared Polis has already signed the legislation into law, it's unlikely that anything will prevent the rules from taking effect on November 1. And since company officials helped write the language for House Bill 1090, the legislation allowing looser regulations over cannabis company ownership, they definitely know how to walk the tightrope.

According to the company's public declarations, most of the businesses are being acquired in exchange for Medicine Man Technologies stock. Bigger players are likely to enter the field soon, as seen by the action in Canada's legal pot trade or the hemp industry, both of which have looser investment regulations.

And they'll be moving quickly, since lucrative opportunities are somewhat limited in certain parts of the state. Easily Colorado's largest cannabis market, Denver isn't currently permitting new dispensary licenses, while Colorado Springs, the second-largest city in the state, doesn't allow recreational sales. With few attractive locations available for those who want to start from scratch in an urban area, purchasing an existing dispensary license is one of the only ways to gain a footing in the country's most evolved pot marketplace. For those already in the market, it's a way to maintain your competitive advantage.

Brace yourselves: The mergers and acquisitions are just beginning.
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Thomas Mitchell has written about all things cannabis for Westword since 2014, covering sports, real estate and general news along the way for publications such as the Arizona Republic, Inman and Fox Sports. He's currently the cannabis editor for
Contact: Thomas Mitchell