A Canadian marijuana company will not acquire a New Mexico medical marijuana nonprofit after all.
Nutritional High, the Toronto-based company focused on creating a high-level brand of cannabis-infused edibles, canceled its deal to buy 51 shares of Santa Fe-based Sacred Garden, one of 23 state-sanctioned medical cannabis producers.
In a statement released Tuesday, Nutritional High said its decision was based on “various factors,” including “the due diligence process, larger opportunities in other states” and “a decision to maintain the Company’s stated focus on marijuana oils, extracts and edibles while limiting exposure to risks inherent in marijuana growing.”
“Given the small size of the New Mexico market in relation to the costs to acquire Zephyr, to build out its grow capabilities, and to build out our edibles facility using the quality control and dosing methods we have been, we have decided to focus our financial resources on other pipeline opportunities,” Nutritional High CEO David Posner said in the statement.
The reversal comes after a high level of scrutiny from the state’s medical marijuana community over the planned acquisition. Tim Scott, president of New Mexico Medical Cannabis Patients Alliance, told New Mexico Political Report last month that he feared the deal could lead to consolidation and monopolization of the local industry.
“We don’t need the money that comes in the program going out of state, yet alone out of the country,” Scott said at the time.
Rumours of the deal falling through began not long after Nutritional High announced the acquisition in April. Last Friday, Posner wrote in an email to New Mexico Political Report that the planned acquisition was still on.
“We are still working on the deal,” Posner wrote. “No bad news to report. There are always lots of rumors in this industry.”
On that same day, the company’s stock dropped more than 13 percent.
Though New Mexico law doesn’t allow out-of-state companies to directly takeover in-state medical marijuana nonprofits, they can assume control of their management.
Under the proposed terms of the original deal, Nutritional High would have created a company called Zephyr to take over management operations of Sacred Garden. Sacred Garden President Zeke Shortes previously said the deal would give his company much-needed cash to expand its production, which he said would increase the quality of the marijuana while lowering costs for producers.
But Shortes told New Mexico Political Report last month that the vigorous backlash over the deal was only leading to headaches.
“All I was trying to do was get some funding where we can get into a better facility and get into more production,” he said at the time. “I definitely wouldn’t do this over again because of all of this distraction.”
At least one local medical marijuana advocate is celebrating over the deal’s termination. Larry Love, host of MedicalMarijuanaRadio.com, said he’s “very happy the hard earned money of New Mexico Patients is not leaving the country to Canada.”
Love previously worked for Sacred Garden and left under bad terms.