Grassroots Cannabis raised $90 million to expand its operations in Illinois and across the country, becoming the latest Chicago-based marijuana company to attract sizable funding.
The money will be used to further develop Grassroots' cultivation facility in Litchfield, Ill., about 210 miles southwest of Chicago, said Chief Executive Officer Mitch Kahn.
Grassroots also plans to expand its cultivation facilities in Maryland and Pennsylvania, states with growing medical-cannabis programs, and build dispensaries in other states where the company recently won licenses. The bulk of the funds, though, will be put toward mergers and acquisitions of other cannabis operations, Kahn said.
Capital has been flowing into the cannabis space for "quite some time now," but until recently, the investments tended to be smaller and from individuals, said Bethany Gomez, managing director of Chicago's Brightfield Group, which does market research in cannabis-related industries. The investment floodgates opened after beer-maker Constellation Brands put almost $4 billion into a marijuana company at the end of 2017.
"That was viewed as the point of no return," Gomez said. "This cannabis industry is happening. You can't put the genie back in the bottle."
Now, with large rounds of capital fueling them, marijuana companies are on buying sprees as they vie to become large national chains, Gomez said.
Last week, a company in Phoenix agreed to pay $850 million for Chicago cannabis operator Verano Holdings. Chicago's Cresco Labs announced Monday that it would pay $120 million for a Florida marijuana company. Last year, national operator MedMen bought Oak Park's PharmaCann for about $680 million.
Grassroots employs about 450 people. Kahn expects total employment to grow to 800 by the end of the year.
Business on 03/20/2019