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Illinois group buys three Chicago dispensaries from Okay Cannabis

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This story was republished with permission from Crain’s Chicago

A marijuana grower and retailer from Western Illinois is expanding its presence in Chicago, buying three Okay Cannabis stores.

Nature’s Grace & Wellness bought the dispensaries in West Town, Evanston and Wheeling from a group that includes Chicago restaurateurs Scott Weiner and Greg Mohr, along with former Chicago Alderman Ameya Pawar.

Terms of the deal were not disclosed, but it brings together one of the earliest entrants into the Illinois cannabis industry with one of the newest.

The O’Hern family, who run a large cattle farm near McComb, was awarded one of the original cultivation licenses when Illinois legalized cannabis for medical use in 2014. They later added a pair of dispensaries in Peoria under the Trinity brand.

The company also operates Bud & Rita’s dispensaries in Avondale and Niles under a managed-services agreement with plans to acquire the stores. It plans to open another store in Wadsworth.

Okay Cannabis was among the winners of new retail licenses issued in lotteries after Illinois began recreational marijuana sales in 2020. The company had the capital to quickly turn its licenses into stores, which proved to be a challenge for lottery winners facing a pandemic and a retreat by cannabis investors.

The sale signals that some of the newly issued dispensary licenses are beginning to change hands. The Illinois Department of Financial and Professional Regulation did not allow lottery winners to sell their conditional licenses before standing up a physical storefront. So far, 129 of 227 new licenses have become operating dispensaries.

“We are thrilled to welcome Okay Cannabis into the Nature’s Grace & Wellness family,” President Timothy O’Hern said in a statement. “This acquisition allows us to combine our strengths and enhance the overall customer experience for our customers at Okay while vastly increasing the quantity and variety of cannabis products available in the dispensaries.”

As co-owners of Fifty/50 Group, which operates several Chicago-area restaurants, Weiner and Mohr brought something unique to the traditional playbook of selling weed, combining a restaurant, bar and consumption lounge at its Wheeling store. In Evanston, they paired a dispensary with a bakery. Its West Town store is near a restaurant and bar.

“We are excited about this new chapter for OKAY Cannabis,” Pawar said in a statement. “We developed and opened three amazing, first-of-its-kind dispensaries in just over one year.

“When we recognized that we needed to be vertically integrated to truly take the business to the next growth stage, we wanted to find a buyer who aligned with many of our own core values and beliefs.”

O’Hern says Nature’s Grace & Wellness took over management of the dispensaries in early June. The acquisition gives Nature’s Grace seven stores toward its goal of 10, which is the limit under state law.

“While we had many interested suitors, we felt a connection to the O’Hern family, and we are confident that Nature’s Grace & Wellness will take Okay to greater heights,” Weiner said in a statement.



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Massachusetts regulators order single-lab testing to combat cannabis lab shopping

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Massachusetts regulators will require cannabis businesses to use a single laboratory for all compliance testing in an effort to prevent companies from shopping around for favorable test results.

The state’s Cannabis Control Commission voted 3-0 to require licensed businesses submit testing samples to one independent laboratory starting April 1, 2025, according to an administrative order advanced Thursday. The new rule is meant to close loopholes that some say have allowed companies to shop around for labs to juice their numbers for market share.

“This administrative order continues our mission of being a strong regulator,” Acting Executive Director Debbie Hilton-Creek said in a statement.

Under current rules, companies can split testing among multiple labs. The practice has led some facilities to report suspiciously high THC levels or overlook contamination to attract business.

The commission’s enforcement team said the changes would reduce risks of noncompliant products reaching consumers and improve audit capabilities. The move follows a November listening session in which testing concerns were raised, according to the announcement.

If an original testing lab needs to subcontract work, they must first obtain commission approval and demonstrate they are “incapable of performing certain required tests due to a hardship.” Labs also can only subcontract with one other facility at a time.

“The commission shall only approve subcontracting agreements when the Originating Independent Testing Laboratory is incapable of performing certain required tests due to a hardship relative to its facilities, instrumentation, personnel, or required consumable materials or in the event of an actual or potential conflict of interest,” according to the order.

Results must be uploaded to the state’s tracking system within 72 hours, with all certificates of analysis containing the complete testing results, including any subcontracted work, it said.

The commission will also begin publishing THC test results on its public data platform and establishing regular meetings with licensed laboratories to improve oversight.

The commission thus far has struggled to implement effective testing oversight. Earlier this year, the agency contracted with a private lab for a “secret shopper” program to verify retail products’ test results, Green Market Report previously reported. Unlike other major cannabis markets such as California and Colorado, Massachusetts lacks a state reference lab to independently verify commercial lab results.

Analysis of testing data by MCR Labs found that across multiple states, laboratories reporting higher THC concentrations tend to increase their market share while those reporting average failure rates lose business, according to Chemical & Engineering News.



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Cansortium completes merger with RIV Capital, plans to scale up in New York

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Florida-based Cansortium (CSE: TIUM.U) (OTCQB: CNTMF), which does business as Fluent, has finalized its megamerger with New York-based RIV Capital, (CSE: RIV) (OTC: CNPOF), creating a new multistate operator that has a footprint in four states with 42 operational dispensaries.

The move gives Cansortium immediate access to New York, one of the fastest-growing legal marijuana markets in the nation, along with its existing portfolio of cannabis shops and grows in its home state, Pennsylvania and Texas. The company now owns eight total cultivation and processing facilities, which it said in a press release would allow it to bolster the Fluent brand even more going forward.

The company reportedly has $33 million in the bank with which to finance further acquisitions, it said in a Thursday announcement.

Another major winner in the deal is Scotts Miracle-Gro, which has a sizable stake in RIV Capital through its subsidiary The Hawthorne Collective. Existing shares will be converted into 1.245 shares of the newly formed Fluent, eliminating $160 million in company debt.

Shareholders of Cansortium will own 51.25% of the new Fluent, while shareholders of RIV Capital will own 48.75%, the company said. The company will continue trading under Cansortium’s existing ticker symbols on the Canadian Securities Exchange and the Over-The-Counter markets.

Cansortium CEO Robert Beasley will continue to lead the new company, and RIV Capital interim CEO David Vautrin will serve as the new company’s chief commercial officer.

Beasley said in the release that Fluent intends to scale up wholesale operations in New York to boost its Moods brand of marijuana products and “gain additional shelf space in dispensaries across the state,” which he said has “immense potential.”

The merger could prove key to the long-term prospects for both Cansortium and RIV Capital. Cansortium posted an $11.7 million net loss for the third quarter of 2024, and RIV Capital reported a $63.4 million net loss for the same period.

“Looking ahead, we remain focused on sustainable, long-term growth and will continue to drive efficiencies across all areas of the business to achieve our profitability and cash generation goals,” Beasley said.



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The Daily Hit: December 19, 2024

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News from: US Farm Bill, Fluent Cannabis, Massachusetts and more.

The Daily Hit is a recap of the top financial news stories for Thursday, December 19, 2024.

On the Site

Farm Bill extension leaves hemp industry rules intact for now, including intoxicating products

The farm bill extension would run through March 2025.

Read more here.

Cansortium completes merger with RIV Capital, plans to scale up in New York

Scotts Miracle-Gro, which is a major investor in RIV, also benefits from the deal.

Read more here.

Massachusetts regulators order single-lab testing to combat cannabis lab shopping

The rule change follows growing evidence of inconsistent testing practices in the state’s $7 billion cannabis industry.

Read more here.

Nine New York social equity retailers ask to join lawsuit halting cannabis licensing for 3rd time

A court filing argued that the group of CAURDs are in danger of bankruptcy if the injunction is not removed soon.

Read more here.

In Other News

Greenway Greenhouse Cannabis Corp.

Greenway Greenhouse Cannabis Corp. entered into an asset purchase agreement to acquire all of Choice Growers’ consumer packaged goods brands, SKUs and listings of the brands, trademarks, goodwill and other associated intellectual property. This acquisition encompasses all of Choice Growers’ brands, including Grapefruit God Bud (also known as Grape God), The Jeffrey, Watermelon Pebbles, Pink Lemonade, Duke Nukem, Tangerine Dream and Blackberry Cheesecake.

Read more here.

Innocan Pharma Corp.

Innocan Pharma Corp. intends to complete a non-brokered private placement of up to 3.5 million units of the company at a price of C$0.20 per unit for gross proceeds up to C$700,000 plus 15% overallotment options. The offering is expected to close on or around Dec. 31.

Read more here.



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