In the second marijuana sector acquisition announced in the past week, Columbia Care (CCHWF -1.68%) has agreed to buy a privately held peer, Green Leaf Medical. The up-front price is roughly $240 million, with potentially more to come if certain unspecified performance-based milestones are reached in 2022 and 2023.

Like Columbia Care, Green Leaf Medical is a vertically integrated multi-state operator (MSO) with cultivation/production and retail assets in the mid-Atlantic region. Once consummated, the deal will strengthen Columbia's presence in four markets in which it already operates -- Virginia, Maryland, Pennsylvania, and Ohio.

The company believes that of these states, which currently permit only medical marijuana, three will legalize recreational consumption and sale too within the next two years. 

Marijuana flowers atop a collection of U.S. currency.

Image source: Getty Images.

Columbia Care wrote in its announcement that owning Green Leaf Medical will be "immediately accretive" to gross margin, adjusted EBITDA, and free cash flow. It is funding $45 million of the up-front price in cash, with the remainder to be financed by a secondary stock issue of just over 43.9 million of its common shares. It did not divulge more details of this flotation.

At the end of its most recently reported quarter, Columbia Care had just over $42 million in cash on its books.

According to data compiled by Yahoo!, Columbia Care has slightly more than 219.4 million shares outstanding, so the upcoming share issue promises to be quite dilutive. Yet Green Leaf Medical appears to be a good fit, both in its business profile and because it has a similar regional footprint.

The company's acquisition of Green Leaf Medical is subject to approval from the relevant regulatory bodies. Columbia Care believes the deal will close in the summer of next year.