Curaleaf to buy up Virginia cannabis assets as state’s adult-use rollout nears

Curaleaf Holdings Inc (TSE: CURA) (OTCMKTS: CURLF) has agreed to spend US$110 million on a handful of medical dispensaries and an 82,000-square-foot cultivation facility in Virginia.

These assets and a state marijuana license are being obtained from Cannabist Company Holdings Inc (OTCMKTS: CBSTF) (FRA: VW5). The license will also permit Curaleaf to open a sixth dispensary. Curaleaf expects the deal to close by the end of next year’s first quarter. 

The news, revealed by the companies on Tuesday, comes as Virginia is preparing to potentially begin permitting adult-use cannabis sales by late 2026. A legislative commission just revealed a detailed new proposal to legalize recreational marijuana and is hoping that lawmakers will pass it during next year’s session. It incorporated months of testimonies from industry stakeholders. 

“It [would] build a new market that supports hundreds of small businesses, strengthens Virginia agriculture, reduces racial disparities created by the prohibition of marijuana and protects public safety,” said Virginia State Delegate Paul Krizek on Dec. 2.

Newly elected Democrat Governor Abigail Spanberger is also supportive of this bill for economic reasons. She feels tax dollars procured would be beneficial for local public education. 

Krizek and state lawmakers have projected that legalization would enable the state to generate US$400 million in cumulative tax revenue within five years. 

Another change that the draft bill stipulates is that dry counties would not be permitted. Licensed distributors would be authorized to set up shop anywhere in the Commonwealth. 

Recent efforts to establish an adult-use market in Virginia have been stalled by vetoes from former Republican Governor Glenn Youngkin. He felt that legalization would be bad for the state.

“It’s terrible for children and adolescents,” he stated last year. “It brings about massive increases in child poisonings and usage.”

He also said the high potency of cannabis nowadays is dangerous and drives mental health challenges, even to the point of psychosis in certain cases. His sentiment has been the opposite of Spanberger and Krizek. 

Possession and cultivation have been legal in Virginia for the past five years, but regulated sales have been reserved for medical product only. The launch of Virginia’s adult use sector next year is highly likely, but not guaranteed.