The owner of the High Times cannabis magazine is branching out into main street with an $80m deal to buy Harvest Health & Recreation’s California dispensaries as it looks to get access to the fast-growing retail marijuana market during a difficult time for publishing.
The stock and cash transaction will see Hightimes Holding, which owns the 45-year-old cult magazine, take over 13 dispensaries owned by Harvest Health, one of America’s largest retail and wholesale marijuana distributors. The deal is expected to close before the end of June.
Hightimes’ acquisition of the dispensaries come at a time when California has classified marijuana as an essential product, alongside milk and toilet paper, under the state’s Covid-19 stay-at-home orders — a move that allows the retailer to sell pot when many other stores have been forced to shutdown to contain the spread of coronavirus.
Demand for marijuana in US states where recreational and medical consumption is legal has surged during the coronavirus crisis, as millions of people forced to stay at home are smoking, vaping or eating pot to relax and ease the anxiety caused by the pandemic.
Sales of cannabis have risen 159 per cent in California by mid March compared with the same period in 2019, according to data by Headset, an pot-industry research company. Sales in 2020 have also risen ahead of the stay-at-home order, according to Marijuana Business Daily, a sector focused website.
$11bn Value of the legal market for cannabis globally in 2018
Despite the spike in sales and demand, as people stock up on pot-related products, several California-based marijuana companies have been struggling to deal with the business impact of the coronavirus crisis and are seeking government aid to deal with the fallout.
“We’ve long supported Harvest and the other cannabis-retail-trailblazers as they pushed forward despite changing legislation, insurmountable licensing fees, political stigma and, frankly, through a process that was designed to be difficult,” said Adam Levin, Hightimes’ executive chairman.
The cannabis market has been rapidly expanding in the US and globally as an increasing number of countries legalise marijuana sales for medical and recreational purposes. The legal market for cannabis was worth nearly $11bn globally in 2018 and could reach $50bn by 2029, according to Jefferies equity research.
Several companies producing pot-related products have listed on public markets in recent years, while several smaller groups are building dispensaries across the US to meet heightened demand for a more slick, less seedy experience to buy marijuana.
“We have enormous respect for the Harvest brand and look forward to ushering in the next generation of retail experience with Harvest as a significant shareholder in our company,” Mr Levin said. “We look forward to finding a myriad of ways to work with Steve and the team at Harvest.”
Hightimes plans to convert Harvest stores into High Times branded dispensaries, similar to the way Hugh Hefner, the flamboyant founder of Playboy magazine, used his publication’s trademark to build a nightclub business.
Harvest, which is a multi-state cannabis operator with rights to operate in more than 210 facilities, will continue to operate most of its 130 retail locations, the company said in a statement.