Trulieve Cannabis (TCNNF -0.83%) is venturing quite some distance from its home base of Florida with its latest acquisitions. It announced Wednesday that it has purchase two companies in Pennsylvania, giving it its first assets in that state.
The two are PurePenn and Pioneer Leasing & Consulting, which grows and produces cannabis and related goods, and dispensary operator Keystone Relief Centers.
The former's primary asset is a 35,000-square-foot cultivation and processing facility in McKeesport. According to Trulieve, that facility is currently being enlarged to 90,000 square feet, and has room for further expansion.
Keystone (which operates under the name Solevo Wellness) owns and manages three dispensaries -- one in Pittsburgh, and two in the city's vicinity. As Pennsylvania has not yet legalized the sale and consumption of cannabis for recreational use, those outlets sell only to qualified medical users.
To acquire PurePenn, Trulieve is handing over $46 million -- $19 million in cash and the remainder in its subordinate voting shares. The PurePenn deal also includes a potential earn-out of roughly $60 million, to be paid in those shares, if it hits EBITDA milestones that were not specified.
As for Keystone/Solevo, Trulieve is buying it for $20 million, half in cash and half in subordinate voting shares. Its management, too, will be eligible for Trulieve stock earn-outs if milestones are met; the maximum in this instance is $15 million.
Investors might not like either the geographic stretch away from Florida, where most of Trulieve's operations are located, or the price tags of the deals. Trulieve stock closed Thursday down by nearly 4.9%, against the S&P 500 index's slide of about 0.8%.