A Florida cannabis corporation that is publicly traded on the Canadian stock exchange has acquired a controlling interest in Santa Barbara’s coveted third and final retail marijuana dispensary.
San Diego-based Golden State Greens was one of three companies to snag retail dispensary licenses in Santa Barbara through an application process in the summer of 2018. The other two, Farmacy and Coastal Dispensary, opened in August and September of 2019, respectively.
Golden State Greens never opened its retail shop, however. It turns out that it entered negotiations with Jushi, a Boca Raton, Florida, company that brands itself as “a bold, new principled leader in cannabis and hemp,” to purchase a multimillion-dollar controlling interest in the license for the Santa Barbara store. The purchase price was not disclosed.
The retail shop, at 3516 State St. across from Loreto Plaza, is to open in late September under the name Beyond / Hello.
The City of Santa Barbara quietly signed off on the ownership transfer in May, after hiring Avenu Insights & Analytics of Westlake Village to conduct a financial analysis of Jushi at a cost of $2,400. Assistant city attorney Tava Ostrenger and Matt Fore, senior assistant to City Administrator Paul Casey, approved the financial review, Fore told Noozhawk.
According to the review, as of Sept. 30, 2019, Jushi had $27 million in cash and cash equivalents in the bank.
“Santa Barbara is a perfect example of what we are looking for in acquisition in the California market,” Michael Perlman, executive vice president of investor relations & treasury, told Noozhawk.
“The population is affluent.”
The financial consultant’s report states that Jushi’s hemp initiative also has set its sights on Nevada, Florida and New York for the cultivation, extraction and processing of hemp-derived cannabidiol, or CBD, and that “Jushi is also pursuing development of physician-formulated consumer CBD products for retail.”
Noozhawk obtained and reviewed the Avenu Insights & Analytics report, which states that Jushi either purchases controlling interests in existing dispensary licenses or applies for licenses directly. Jushi, through its subsidiaries, currently owns or manages cannabis operations or holds licenses in Nevada, Pennsylvania, Virginia and parts of the Midwest.
When the Santa Barbara retail store opens next month, it will be Jushi’s first cannabis retail dispensary in California.
Neither Golden State Greens nor its CEO, Adam Knopf, responded to Noozhawk’s calls or emails. But Perlman told Noozhawk that Golden State Greens is entirely out of the picture and will have nothing to do with the Santa Barbara retail shop.
“We are it,” he said.
Perlman would not disclose what Jushi paid for control of the license. Even though the company is traded publicly on the Canadian Securities Exchange, under the JUSH symbol, the amount of the acquisition will be lumped into a larger line item, he said.
A cannabis industry insider with knowledge of how much retail dispensary licenses are worth told Noozhawk that a license in the Santa Barbara market could be worth between $9 million and $11 million. The source spoke to Noozhawk on condition of anonymity.
Perlman said Jushi learned of Golden State Greens’ license from its “originations team embedded in the California market.”
“We think it is a great market, given that there are only three licenses in the market,” he said.
The current retail dispensary market is focused on tourists, Perlman asserted.
“We want to be known in the Santa Barbara market as the company that is focused on the local people, giving them a differentiated shopping experience both online and in stores,” he said.
Santa Barbara’s retail license process has been controversial since the start. In fact, Golden State Greens might never have landed a license had one company not been disqualified.
The City Council in January 2018 agreed to allow three retail storefront dispensaries. Fourteen businesses submitted proposals that city officials reviewed and ranked.
The Cannabis Application Review Team consisted of five people, representing the City Attorney’s Office and the finance, planning, police and fire departments.
The city chose Coastal Dispensary LLC, at 1019 Chapala St.; Farmacy SB, at 128 W. Mission St.; and Golden State Greens. A fourth company, SGSB Inc., originally ranked second, but the city disqualified the application because it was within 1,000 feet of Coastal Dispensary, a proximity that is barred under the municipal ordinance.
The applicants were measured based on a point system: 400 points for the business plan; 300 points for the safety and security plan; 200 points for the neighborhood integration plan; 25 points for its labor and employment plan; and 75 points for its air quality plan. SGSB later filed a lawsuit against the city, which is still pending.
“We really wanted to choose an applicant that knew what it was like to own and run a business in Santa Barbara,” Fore said at the time.
City Councilwoman Kristen Sneddon was unaware that Jushi now has control of the retail dispensary license. She said the council was not informed of the change.
“It’s really important that the integrity of the scoring process is impartial and it favors local vendors,” she told Noozhawk. “I am not a fan of the expansion of this industry. It is important that we prioritize local vendors. This was not my expectation.”
Graham Farrar, owner of Farmacy SB, said he had heard that Jushi would be taking over the control of the Golden State Greens license.
Coastal Dispensary owner Julian Michalowski called the transaction “business.”
“For me, as long as they’re a good operator and a good player in the space, and keep making the industry do well, I am OK,” he said. “As long as they are a good actor. We have all created a really good reputation for cannabis in Santa Barbara.”
— Noozhawk staff writer Joshua Molina can be reached at email@example.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.