Chem Tales: Apothecarium Acquired!

Toronto’s TerrAscend spends $118 million to buy one of San Francisco’s most popular dispensaries.

(Enrique Sanchez/SF Examiner)

The Canadian takeover of cannabis has officially arrived in San Francisco.

On Tuesday, The Apothecarium — one of the Bay Area’s most venerable dispensaries — announced that Toronto biopharmaceutical and wellness company TerraAscend will buy it. In a statement, Apothecarium’s Chief Marketing Officer Eliot Dobris noted that $118 million deal will lay the groundwork for additional locations around the country.

Before anyone frets over the fate of Apothecarium’s three local locations — currently, there are stores in the Marina, SoMa, and the Castro, plus a fourth dispensary in Las Vegas — the company has stated that it doesn’t expect the TerrAscend acquisition to cause any substantial changes to staffing or operations.

Our CEO and leadership team will be staying on in their current roles,” Dobris confirmed in the release. “No major changes are planned for our dispensaries: prices, people, and products will be staying steady.”

One intriguing bit of information included in Tuesday’s announcement is the revelation that all full-time Apothecarium employees — including budtenders — will receive TerrAscend stock as part of the deal.

In a statement issued by Apothecarium CEO Ryan Hudson, he underscored the importance of making sure those employees were protected.

It was also a priority for my co-founders and I that our employees be well taken care of,” Hudson writes. “I’m proud to say that all of our full-time employees will receive stock in TerrAscend. The fact that TerrAscend wanted that too says a lot about them and is a big part of the reason we’re so happy to be working with them.”

Elsewhere, Hudson also touches on the fact that Apothecarium was courted by various suitors before deciding to team with TerrAscend. He notes that his company opted not to align with organizations focused on tobacco or alcohol, a possible indication that industry heavyweights like Altria — the parent company of Philip Morris, which recently spent $1.8 billion for a 45-percent share in the cannabis company Cronos — may have expressed interest at some point.

Notably, Hudson bills the TerrAscend deal as a necessary step in securing its employees’ job security.

The industry is undergoing massive change and consolidation, and regulatory turmoil,” he writes. “We have around 200 employees to think about. To secure their jobs, it was clear that we needed to partner with another company.

It’s fair to question whether the “security” Hudson refers to is inextricably tied to Apothecarium’s desire to expand beyond the Bay Area.

With the opening of the company’s Las Vegas location in 2016, it became clear that Hudson was eyeing an enterprise that transcended state lines. As more and more states vote to allow medical and recreational cannabis, the appeal of welcoming an established dispensary that knows the ropes and already has a proven track record is undeniable, putting Apothecarium in an enviable position to enter new markets as soon as they form.

Meanwhile, according to data published by the job search database Glassdoor, job openings in the cannabis industry have increased by 76 percent in the last year. A February report from CNBC adds that cannabis workers across the country are currently earning, on average, “11 percent more than the U.S. median salary of $52,863.” While these statistics don’t empirically negate Hudson’s concerns regarding employee job security, they do indicate that pivotal staff members at companies like Apothecarium are in high demand.

There is little value in trying to predict how the TerrAscend acquisition will shape the future of the Bay Area cannabis industry beyond the fact that the Silicon Valley blueprint for success appears to be in play.

Hopefully, efforts to improve value and appeal to potential buyers will not hinder the underlying mission of businesses like Apothecarium, but it’s too soon to tell. So far, there is no reason for pearls to be clutched, but given one of the best attributes a dispensary can achieve is having a diverse array of inventory, it’s only fair to wonder how the addition of new leadership (and their pre-existing partnerships) will be reflected in the products for sale.

We believe The Apothecarium is the model for operational excellence and will set the tone for our US cultivation and retail expansion,” TerrAscend President Matthew Johnson said in a press release. “We admire their philanthropic dedication and local community engagement.”

As do the people of San Francisco, who will now need to watch closely to see if the region’s most popular cannabis entities continue to avoid the looming pitfall that comes with the territory: putting customers second to profit. For now, it appears Apothecarium is committed to doing things the right way. Let’s just hope their priorities don’t go up in smoke.

 

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