MJBizMag July 2021 - 48

SCALE
HOW IT
SUITS YOU
By market type
Vertical integration
stance by market
type.
Medical (37)
Prohibits
2
NV
CA
Requires
14
Prohibits
1
TX
AK
Requires
1
Allows
9
Source: MJBizFactbook
" We raise capital not only to keep up
with our public competitors but also to
do accretive transactions and bring in
more assets-and to continue to follow
this regional strategy, " Genderson said.
Before winning the three East Coast
licenses in 2017, Genderson felt confident
enough about his company's prospects
that he raised $40 million in 2016 from
family and friends to use toward facilities
in those markets and to expand elsewhere
on the East Coast as well as in California,
which had just passed Proposition 64, the
state's recreational legalization initiative.
Even though it went against Holistic's
limited-license state strategy, the
company bought retail licenses in Los
Angeles, San Francisco and the San
Fernando Valley in 2018.
" California is very competitive and
very mature, but it's also the world mecca
for cannabis, " Genderson explained.
" If you can make it there, you can make
it anywhere. "
While acquiring and building out
assets in California, Holistic raised
48 MJBizMagazine | July 2021
another $55 million in 2019 and
successfully applied for licenses in
Michigan, Missouri and West Virginia.
" We continue to prove that not only
can we do it in East Coast, regulated
markets that had moats around them,
but we can do it in hypercompetitive
markets like California, " Genderson said.
In May of this year, Holistic secured a
$55 million convertible note to launch its
Missouri and West Virginia operations
and break into new markets such as
Illinois, New Jersey and Virginia, where
it has already filed license applications.
TIMES FOR M&A
Although winning licenses is
Genderson's preferred route when it
comes to scaling, he said M&A is always
an option when circumstances merit
such an action, as California showed.
Another situation that merited an
M&A move arose in Maryland, where
businesses are allowed to have up to
four retail stores. Holistic won one grow
license, one processor license and one
retail license. Since it couldn't apply for
any more retail licenses, the company did
" tuck-in acquisitions, " buying stores in
Baltimore and Prince George's County to
complement the store they already had in
Montgomery County.
" We'll do M&A when there's not a
license to be won. If there's a license to
be won, we generally try to go that route,
because we've had a lot of success that
way, " Genderson said.
" As things progress, and as there's
more consolidation and as the federal
government moves in, we'll look at M&A
a little bit more broadly. Because buying
revenue and buying mature assets can be
really accretive if you do the right deal, "
Genderson said.
" A lot of the licensing, a lot of the
applications that we won are assets
that are being built out now. Those
will continue to open and will add to
our scale, add more revenue and more
EBITDA, " Genderson said. " I think M&A
will play a more crucial role now that
you're seeing so much consolidation. "
FL
HI
LA
Allows
21
Recreational (11)
AZ
NM
UT
CO
KS
OK
MO
TN
AR
MS AL
GA
SC
KY
State Stance on Vertical Integration
Allows
Requires
WA
MT
OR
ID
WY
NE
SD
ND
VT
MN
NH
WI
MI
IA
IL
IN
OH
WV
VA
NC
PA
CT
NJ
DE
MD
NY
MA
RI
ME
Prohibits
Medical requires/
recreational allows
MJBizMag July 2021

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