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Law360 (April 13, 2020, 8:42 PM EDT ) Nevada cannabis company Planet 13 called off its planned $10 million acquisition of a Santa Ana, California, dispensary Monday, the latest in a series of cannabis transactions canceled as the country fights the coronavirus pandemic.
Planet 13, which is known for its mega-dispensary in Las Vegas, said in a release that it was terminating its definitive agreement with dispensary Newtonian Principles Inc. due to "unmet conditions" in the deal.
Planet 13 announced the transaction last June, marking what would have been the company's first foray into California. In the deal, Planet 13 would acquire Newtonian Principles' license and lease for a dispensary in exchange for $6 million in cash and about $4 million in shares, according to the company.
"While we are disappointed to be walking away from this expansion, we know that preserving our capital is the right thing to do at this time," Larry Scheffler, co-CEO of Planet 13, said in a statement Monday. "We have offered to renegotiate the acquisition with the seller to fairly reflect the delays in closing the definitive agreement and the new macro environment."
Newtonian Principles' owner, Kyle Desmet, did not respond to an email seeking comment. Calls to Newtonian Principles' phone number connected to an answering machine for Planet 13 on Monday afternoon.
Representatives for Planet 13 did not respond to requests for comment.
Scheffler said the company has offered to renegotiate the terms of the deal to take into account the delay in closing the definitive agreement and the new state of the economy — a likely reference to the virus's impact.
But several other cannabis companies have explicitly blamed the virus for the cancellation of their acquisition deals in recent weeks.
At the end of March, Harvest Health & Recreation Inc. and Verano Holdings LLC said they were nixing an $850 million merger announced last year in light of the virus. Verano CEO George Archos said the deal had already been slowed by the antitrust approval process, and the virus was dragging that out even longer.
And at the beginning of April, Acreage Holdings said it was ending a $120 million deal to acquire Nevada-based marijuana cultivator and manufacturer Deep Roots Medical LLC.
"The COVID-19 crisis was the nail in the coffin, but the moratorium on deals that's been in place by the state of Nevada was the hammer," Acreage spokesperson Howard Schacter told Law360 after Acreage's announcement.
While the virus may be to blame for the most recent canceled cannabis transactions, the cannabis industry has seen a wave of terminations and restructures starting last year as stock prices dropped.
In October, MedMen Enterprises Inc. canceled a planned merger with PharmaCann LLC valued at $682 million. That same month, Curaleaf said it was dropping the price of its acquisition of Cura Partners by about $200 million.
In November, Cresco Labs and Origin House said a deal originally valued at $827 million was being restructured, giving Origin $370 million in Cresco shares and equity instead.
--Additional reporting by Sarah Jarvis, Jack Queen, Benjamin Horney and Mike LaSusa. Editing by Abbie Sarfo.
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