In a strategic move to streamline its portfolio, iAnthus Capital Holdings, Inc. has announced the sale of its Arizona-based cannabis assets to Sonoran Roots in a deal valued at approximately $36.5 million. The transaction, which includes dispensaries, processing, and cultivation facilities, marks a significant shift for both companies as they refine their business strategies in the evolving cannabis industry.
Details of the Transaction
The sale involves three dispensaries and two processing and cultivation facilities located in Arizona. iAnthus will receive $20 million in cash at closing and a $16.5 million secured promissory note from Sonoran Roots, carrying an annual interest rate of 6% over a 66-month term.
This divestiture is part of iAnthus’ broader strategy to focus on high-growth markets where it sees the most potential for expansion, including Florida, Maryland, New Jersey, Massachusetts, and New York. While the company will no longer own the assets being sold, it will retain a retail presence in Arizona through its Health for Life dispensary in Mesa.
Richard Proud, CEO of iAnthus, stated that the deal aligns with the company’s long-term objectives. “This move allows us to enhance our operations in our strongest markets while ensuring that our Arizona customers continue to receive the quality service they expect. We are confident that Sonoran Roots is the right operator to take these assets forward.”
A Growth Opportunity for Sonoran Roots
For Sonoran Roots, a well-established Arizona-based cannabis operator, this acquisition represents a significant expansion of its footprint within the state. With the addition of these assets, the company will now operate seven Ponderosa Dispensary retail locations across Arizona, including in Chandler, Flagstaff, Glendale, Mesa, Phoenix, Queen Creek, and Tucson.
Michael O’Brien, CEO of Sonoran Roots, emphasized the strategic importance of the acquisition. “This deal strengthens our ability to serve more customers across Arizona and enhances our production capacity. We are excited to integrate these assets into our operations and continue providing high-quality cannabis products under the Sonoran Roots and Canamo Concentrates brands.”
Market and Financial Implications
The transaction provides iAnthus with increased liquidity to manage its debt obligations and reinvest in its priority markets. The company has faced financial challenges in recent years, making this sale a necessary step to stabilize and refocus its operations.
Sonoran Roots, on the other hand, gains immediate access to a larger consumer base and expanded cultivation and processing capabilities. The deal positions the company for sustained growth in Arizona’s competitive cannabis market, where demand continues to rise following the state’s legalization of recreational marijuana in 2020.
Final Thoughts
The sale is expected to close in the first quarter of 2025, pending regulatory approvals. Financial advisors for the transaction included Ducera Securities, LLC for iAnthus and Beech Hill Securities, Inc. for Sonoran Roots.
This deal underscores the shifting dynamics of the cannabis industry as companies refine their market strategies to ensure long-term success. While iAnthus consolidates its focus on key markets, Sonoran Roots emerges as a dominant player in Arizona, poised to capitalize on the state’s growing cannabis sector.