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Harvest Health, Verano Holdings Terminate Merger Deal

Cannabis company Harvest Health & Recreation Inc. (HRVSF) and privately-held Verano Holdings, LLC said Thursday that they have agreed to mutually terminate their merger transaction, citing the "persistent challenges" in consummating the transaction as well as current market conditions.

The companies noted that various factors contributed significantly to the decision not to go ahead with their business combination agreement. These include prolonged obstacles in meeting state and local regulatory requirements required to transfer ownership and operational licenses, adverse capital market conditions, and a challenging environment for asset sales.

No breakup fees or other considerations are owed by either party due to the termination of their business combination agreement.

Harvest Health said a year ago, in March 2019, that it agreed to acquire Verano in an all-stock transaction for an estimated purchase price of about $850 million.

"We remain focused on continued development of assets in our core markets including Arizona, Florida, Maryland, and Pennsylvania. Recent capital raising efforts have afforded the company sufficient resources to continue to invest in strategic projects while moving toward profitability," said Steve White, CEO of Harvest Health.

"Now with the COVID-19 pandemic often being dealt with in the very agencies that must approve the transaction, it has become clear that this combination would not be completed within the established timeframe. We look forward to continuing to grow our operations as one of the largest privately held multi-state operators in the U.S.," said George Archos, CEO of Verano Holdings.

Harvest Health said it will provide an in-depth corporate update on its capital, merger and acquisition strategy and outlook during its fourth quarter earnings call on Tuesday, April 7.

Some other merger transactions in the cannabis industry were also terminated recently.
In October 2019, California-based MedMen Enterprise said it decided to terminate a deal to acquire marijuana company PharmaCann LLC in all-stock transaction, citing market developments over the past twelve months and the continued evolution of its business strategy.

Cresco Labs said in November 2019 that it decided to terminate its proposed acquisition of VidaCann Ltd. The transaction was announced in March 2019. The company said it plans to re-allocate resources to existing higher return opportunities.

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