Investment vehicle RIV Capital (RIV.CD) will buy farm-to-shelf marijuana company Etain Health for $247 million, the companies said on Wednesday, as it bets on New York becoming a top marijuana market in the world.
New York legalized recreational use of marijuana in March last year and is poised to surpass California as the largest legal weed market. Seventeen other states have legalized recreational marijuana, all in defiance of federal law.
Etain and nine other companies with medical weed licenses in the state are best positioned to gain when licenses to open recreational marijuana stores in New York are issued later this year.
RIV, which used to be owned by Canadian pot producer Canopy Growth, will pay Etain $212 million in cash and about $35 million in stock.
After parting ways with Canopy in 2020, RIV received a $150 million investment from gardening company Scotts Miracle-Gro’s (SMG.N) cannabis arm, which it expects to use to finance the cash portion of the deal.
RIV Capital also named Mark Sims, the former head of dealmaking at Scotts Miracle-Gro, as the company’s new chief executive officer, replacing Narbé Alexandrian.
Started in 2015, family-run Etain cultivates, processes, distributes and sells medical marijuana at its four retail stores in New York. Its products currently include wellness oils, oral sprays and vape pens.
RIV has the ability to expand to eight stores, three of which will be for adult use facilities or dispensaries, Sims told Reuters.
“The New York market is prone to be one of the top markets in the country. Things that happen in New York can impact the tri-state area as well as the rest of the country from a branding perspective,” he added.