Frequently acquisitive marijuana company Curaleaf (CURLF) saw its shares fall by over 2% on Tuesday. This was despite its announcement of a new asset buy in a very hot market.
For the second time in a week, Curaleaf dropped news that it is making an acquisition in Arizona -- one of the more recent states to have legalized the consumption and sale of recreational marijuana.
The latest buy is of Bloom Dispensaries, which operates four retail stores in the southwestern state, plus two cultivation and processing facilities with a combined footprint of around 63,500 square feet. The dispensaries are located in Phoenix, Tucson, Peoria, and Sedona. The latter store is so far the only operating pot dispensary in the city.
Curaleaf is effecting the deal in an all-cash transaction valued at $211 million.
Curaleaf wrote that Bloom Dispensaries boasts "an attractive financial profile," by which it means the business has earnings before interest, taxes, depreciation, and amortization (EBITDA) of over 40%.
Last week, Curaleaf revealed that it had purchased a single-dispensary operator in Arizona, Natural Remedy Patient Center, for $12 million. And last month, it struck a $286 million deal to operate another in-state weed business, Tryke Companies.
When Curaleaf announced the Natural Remedy Patient Center deal, the company's shares rose 3% on that day. It's a bit hard to tease out why investors are holding their noses at the Bloom Dispensaries acquisition. After all, it's not only more extensive than last week's buy, it also strengthens Curaleaf's presence in key Arizona municipalities.
Perhaps investors are dismayed at the price, which on a per-facility (dispensary and cultivation/processing center) basis is notably more expensive. But these are well-located assets and make Curaleaf much more of a player in the state, so I think Tuesday's sell-off is unwarranted.