Marijuana MSO Curaleaf’s Virginia expansion unravels amid more lucrative offer
Less than three weeks after announcing an ambitious $110 million expansion into Virginia, where adult-use marijuana sales are expected to begin sometime next year, Curaleaf Holdings’ purchase of competitor The Cannabist Company Holdings’ assets in the state is off.
The reason why New York-based Curaleaf won’t purchase a vertically integrated medical cannabis permit after all? A competing offer for a total of $160 million materialized, Curaleaf said in a press release Friday.
The Curaleaf deal, finalized Dec. 1, was set to close in the first quarter of 2026 and included Cannabist’s five existing stores in the Richmond, Virginia, area and an 83,000-square-foot cultivation operation, with the right to open a sixth store.
But on Thursday, the same day President Donald Trump issued an executive order downgrading cannabis’ status under federal law, Massachusetts-based Cannabist said it will sell its Virginia permit to an affiliate of Millstreet Credit Fund for $130 million, “subject to adjustment.”
Millstreet is a Boston-based hedge fund, according to Securities and Exchange Commission filings.
Curaleaf’s offer was for $80 million in cash up front, $20 million to be paid within 30 days and a $10 million promissory note at 6% interest.
It wasn’t immediately clear whether the more generous deal was directly related to the prospects of cannabis becoming a Schedule 3 drug.
According to a Cannabist press release, the deal is for $117.5 million in cash “payable … upon closing.” According to Curaleaf, that deal also includes “the assumption of a $30 million lease liability.”
Proceeds from the sale will satisfy debt coming due at the end of 2028, according to The Cannabist Co.
Curaleaf is still due a $3.3 million “break-up fee” from Cannabist as a result of the latter company accepting the more lucrative offer, according to a press release.
Virginia’s medical cannabis market is severely restricted by law to only five vertically integrated permits, each of which is restricted to a specific geographic region.
Despite that, the state reported nearly $30 million in sales in July and August, the first two months of state-mandated track-and-trace monitoring.
Adult-use cannabis sales could reach $780 million in the first full year of sales and exceed $1.09 billion by the second year, according to the MjBiz Factbook.
According to a 2020 study commissioned by state lawmakers, Virginia could support between:
The other four existing medical marijuana permits are held by:
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
What you will get:
In an adult-use scenario – considered to be an inevitability, with Democratic Gov.-elect Virginia Spanberger pledging to finally launch adult-use sales in the South – it remains to be seen whether existing medical operators will get first dibs as in Maryland, or whether regulators will give preference to small business, a la New York state.