A Bend edible cannabis company is being acquired by a Canadian company for an undisclosed sum.
The proposed acquisition is one example of consolidation occurring in the growing recreational cannabis industry during the past two years, said Beau Whitney, a senior economist at New Frontier Data, a cannabis analytics company. Among the most notable is Massachusetts-based Curaleaf’s purchase of Cura Cannabis in Portland, Whitney said.
“This is part of the general evolution of these types of markets,” Whitney said. “There will be consolidations in the markets so that companies can scale their output, capture market share or gain access to markets. The Lunchbox and Cura deals seem to be more of market access than of pure consolidation.”
The acquisition, a combination of stock and cash, won’t be finalized until July, said Eric Plantenberg, Lunchbox Alchemy CEO. Details on the sale are not available until after the deal closes, he said.
Slang said in a statement that the acquisition will boost the company’s position in the Pacific Northwest. Lunchbox Alchemy has been planning a second facility in California.
Plantenberg, who previously was the chief strategy officer at Humm Kombucha, replaced Burl Bryson as CEO in January. Founder Cameron Yee does not have an operational role in the company any longer, Plantenberg said.
Part of the attraction is acquiring local knowledge and talent especially with companies that are multistate operators, Whitney said.
New Frontier believes that more acquisitions and consolidation will occur as the market matures and attempts to scale up, Whitney said.
“Our products will continue to be made and brought to market by the same team that has been doing it,” Plantenberg said. “The conversations we’re having with Slang is what will be our strategy to grow the business and that’s still in development.
“We are working with the existing team to scale the business and capitalize it.”
Last year the company launched expansion plans in Santa Rosa, California, with the construction of an 11,000-square-foot manufacturing facility. That building has been permitted, Plantenberg said, but has not begun manufacturing product yet.
Lunchbox operates a 9,000-square-foot production facility in Bend on Layton Avenue. It employs about 40 people making gummy candies, hard candies and cookies that BDSsurveys ranks second-best in Oregon sales. The firm also makes CBD products that are sold in 40 states. Also part of Lunchbox is Hydra, a company that distributes Lunchbox products to 400 Oregon retailers.
Sales of edibles in Oregon for March were $8.16 million, or about 13 percent of the cannabis sales, according to BDS Analytics, a cannabis market research firm.
Cannabis wholesale prices have ranged from a low of $200 to a high of $2,000 a pound, according to BDS.
With the median price of a pound of cannabis selling in March at $600, companies are just treading water because Oregon companies can only sell their products in the state, said Adam Smith, Craft Cannabis Alliance executive director.
Should recreational cannabis become legal in the United States, companies like Slang, which distributes its brands in 11 U.S. states and is in 2,600 stores, will be poised to take market share, Smith said.
“Yes we are seeing more of these acquisitions,” Smith said. “In this region, you have loads of small locally owned companies that are part of an industry that has been here for a long time.”
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