This will go down in cannabis history. We are looking at the largest deal ever, 10 Washington cannabis retail outlets have decided to collectively sell their business to the highest bidder. GRN Funds is heading up the sale that will attract major attention from large scale investment groups looking to become the new kings of cannabis.
The anticipated price tag for the acquisition will be in the 60 to 75 million dollar range for these marijuana dispensaries. The cannabis retail outlets are spaced around the state but the majority are centered around the Seattle metro area. Justin Costello, CEO at GRN Funds, is excited to head up this historic cannabis sale. As the industry continues to sky rocket, big money players are running to the cash rich industry. He told us “Cannabis is a very unique thing going on in America right now. You see a lot of hedge fund managers, portfolio managers, and private equity companies look at cannabis as an opportunity to add to their portfolio. It’s a really new industry so you don’t see a lot of industry specific funds that associated with it.”
Costello has been around the industry since the Washington State medical days. He originally came to Seattle to check on a $100,000 Medical Marijuana investment for two weeks and never left. Eventually owning 12 cultivation locations, Costello chose to enter the finance side of the cannabis industry when it moved to recreational. “When the industry went to 502 I knew that the industry would need a finance person, I knew it’d need a deal maker.” Already familiar working as a hedge fund manager responsible for identifying emerging markets, Costello gravitated to the speed of deal flow within the cannabis industry. Previous to cannabis, Justin Costello put his finance graduate degree to work internationally in Shanghai, Dubai, and Amsterdam. Finding success both abroad and domestically, the finance guru has always enjoyed “non-traditional” industries.
“There is a reset going on in the industry right now. A lot of businesses that aren’t doing good business are being pushed out of the industry…One thing you always have to be cognizant in Washington is, you have to play by the rules. I like that, there is a lot of structure to it. It’s not like the wild west. Guys with MBA’s don’t really have an easy time doing business with criminals.”
The buyer(s) will need to be an investment group as the state of Washington only allows one individual to hold five retail licenses. Because of the Washington State Liquor and Cannabis Board, the buyers will also need to be suitable in the eyes of legislation.
As the industry continues to grow, there is a surrounding excitement around cannabis. More and more states are going legal and investors are bringing finances to “green” states. This sale is truly a milestone for the business within this field. “There is a lot of action going on in our industry right now. Some good, some bad. One thing I can guarantee is when I wake up in the morning, no day is ever the same for me,” Costello said.
Outside of raising capital for cannabis companies, acquiring new companies and brokering the largest transaction in cannabis history, Costello has also launched Canna-Exchange alongside ex-Amazon engineers. The company is bridging the communication gap between processors, producers, and retail outlets while bringing the industry into the technical level needed in 2017. Costello told us that cannabis has moved backwards in terms of the sales side. Without a lack of proper back end tools, so much of the process is centered around phone calls. Retail inventory managers can’t complete purchase orders handling on 6 phone calls an hour. The platform also aims to bridge the communication gap between producers and processors to move unsold inventory.
Through success and history, Justin Costello remains humble and excited for whats to come next. This deal means a great amount to the cannabis industry and the man behind it has seen this size of play coming since he first entered the industry.
“I’ve done a lot of license deals, a lot of purchases, a lot of capital raises and finance. This is obviously the largest deal period, so no one has done a deal in cannabis, at this level. I am very humbled and very blessed that these owners of these retail shops have entrusted the sale of their life’s dream to me.”
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