Please ensure Javascript is enabled for purposes of website accessibility

Acreage Holdings Is Exiting Iowa's Cannabis Market

By Eric Volkman – Jun 10, 2020 at 1:30PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The decision comes as part of a broader money-saving initiative by the company.

Cost-cutting by Acreage Holdings (ACRGF) has led it to withdraw from the state of Iowa. Barely two months after it suspended its wholesale operations in the state, the company on Tuesday relinquished its medical cannabis manufacturing license there.

At present, the relatively small and sparsely populated state permits only the sale and consumption of medical cannabidiol (CBD). This is heavily regulated by state authorities.

Acreage, under the brand name Iowa Relief, was one of only two manufacturers of cannabis products in the state. It will leave the other, privately held MedPharm, as the sole operator.

Iowa road sign with marijuana leaf.

Image source: Getty Images.

Marijuana Business Daily quoted Acreage Vice President of Communications Howard Schachter as saying that the company's retrenchment "is in keeping with our recent announcement that our focus going forward will be on those markets with the greatest potential for growth."

Like most publicly traded marijuana companies active in the U.S., Acreage had been struggling even before the SARS-CoV-2 coronavirus pandemic. In its wake, the marijuana company announced a raft of cost-cutting measures including employee furloughs and dispensary closures. It also terminated a pair of planned acquisitions.

Earlier this month, Acreage announced it would raise up to $60 million in new capital through a secondary stock flotation and the issue of convertible debentures.

Investors didn't seem happy about the final phase of Acreage's Iowa departure. On Tuesday, the company's stock fell by 4.1%, which was a steeper decline than that suffered by the broader equities market.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Acreage Holdings, Inc. Stock Quote
Acreage Holdings, Inc.
ACRGF

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.