New England Treatment Access, one of the state’s early medical marijuana operators and the first to sell recreational pot in Massachusetts, has agreed to be acquired by a Georgia marijuana firm.
Atlanta-based Surterra Wellness said Monday that its agreement to purchase NETA in a cash and stock transaction “is one of the largest acquisitions to date in the US cannabis industry,” but declined to disclose the price.
The deal, which is subject to approval by the state Cannabis Control Commission, comes amid a wave of consolidation in the Massachusetts cannabis industry. With national legalization already a reality in Canada, and further liberalization of marijuana laws expected in the United States, investors believe scale will be the key to profits in an increasingly commoditized pot business.
“If, in a six-month period, there’s some sort of federal change, and you haven’t established that interstate capacity, you’re going to be at a significant disadvantage,” Kevin Fisher, NETA’s cofounder, said in an interview. “NETA is very strong financially, and there was no pressing need to sell, but the company could have become less competitive in the long run without access to scale.”
Fisher, who will join Surterra’s board if the sale is approved by regulators, insisted the change wouldn’t affect customers of its dispensaries in Northampton and Brookline. And he said he didn’t anticipate any reductions to NETA’s workforce of about 450, which includes employees at its two retail outlets and its cultivation and processing facility in Franklin.
“If this was a cash grab, we’d be selling into a publicly traded Canadian company,” Fisher said. “This is a transaction between two privately held firms aimed at building a more stable, better-resourced, larger scale company.”
Surterra is run by former chewing gum executive William Wrigley Jr. II, and operates 20 medical dispensaries in Florida, plus facilities in Nevada and Texas. The company said it raised $200 million in funding in 2018, and plans to aggressively expand in 2019. The firm also is known for striking a licensing deal with Jimmy Buffett’s “Margaritaville” operation to sell “Coral Reefer” — branded vaporizers, edibles, and lotions.
“We are thrilled to partner with NETA to expand health and wellness offerings to patients and customers in Massachusetts, which is anticipated to be one of the U.S.’s most rapidly growing markets,” Wrigley Jr. said in a statement. “The acquisition of NETA was founded on our aligned set of values and reputable track records.”
In November, NETA’s Northampton retail outlet became the first to sell recreational marijuana in Massachusetts, along with Cultivate in Leicester.
About one-third of the company is owned by Howard Kessler, a wealthy financial industry executive and prominent Boston-area philanthropist. Kessler, Fisher, and other NETA executives all plan to sell their stakes in the company to Surterra.
NETA was the subject of controversy at the dawn of the medical marijuana program in Massachusetts. Fisher had claimed on the company’s license application that he held a bachelor’s degree in psychology from Youngstown State University, but the school told The Boston Globe in 2014 it had no record of his receiving any degree.
Fisher soon resigned as NETA’s executive director, recusing himself from day-to-day involvement in NETA’s business. But the revelation raised questions about the state’s screening process for dispensary owners, and helped prompt a long pause in the rollout of medical marijuana dispensaries. Fisher remained a co-owner of the firm.