Two California cannabis companies, San Diego-based March and Ash and Santa Rosa-based CannaCraft, have entered into a definitive agreement to combine the two companies, Bret Peace, co-founder, partner and general counsel of March and Ash confirmed on Monday.
Peace, who will retain his titles at March and Ash, will become the CEO of Groundwork Holding Inc., the holding company at the helm of the new combined entity. Both March and Ash and CannaCraft will retain their current organizational structures in their respective c-suites. Currently, Blake Marchand serves as co-founder, partner and CEO of March and Ash; Jon Saco serves as co-founder, partner and COO of March and Ash; Ned Fussell and Dennis Hunter serve as co-founders and co-CEOs of CannaCraft. A new board will be formed to oversee the new combined company.
Peace, who declined to comment on the specifics of the merger, confirmed that lending was provided by Altmore Capital. Cowen handled the banking for CannaCraft while Roth Capital represented March and Ash in the transaction.
March and Ash is best known as a dispensary chain local to San Diego and Imperial Counties. Currently, it maintains seven retail locations, which also boast in-house delivery. CannaCraft, as a powerhouse California cannabis company with legacy market roots, is best known for its in-house cannabis brands Farmer and the Felon, Care by Design, AbsoluteXtracts, Humboldt Terp Council and others. In 2019, the company announced $46 million in sales. But, later that year, it also announced it was laying off 20% of its workforce. The merger has been in the works for at least six months, according to Peace and other sources.
Last fall, several current and ex-CannaCraft employees who have requested anonymity in order to protect their current employment confirmed there were additional layoffs at the company as a result of preparations for the eventual merger.
“This merger was done after many months of hard work,” Peace said. “The work ensured what we already know: that our values and vision for a locally-grown industry aligned. Both companies decided to stay in the California market for the long haul. Neither of us have any intention of selling, but we could have. We have no intention of going public.”
Peace added that this effort was a way of ensuring both companies’ longevity and independence in California’s difficult market without “needing to sell to an MSO or turning to the Canadian public market.” The merger provides CannaCraft with built-in retail storefronts and a delivery network, as well as a vertical operation for March and Ash’s retail outfit. Both companies’ workforces are unionized with representation from United Food and Commercial Workers.
As for the new holding company at the helm of the new combined entity, Groundwork, its purpose is to “do the stuff in the background — the corporate, HR, finance, support functions,” Peace said. “Both March and Ash and CannaCraft’s integrity will be maintained. Groundwork’s purpose is to ensure two things: act as interface between the board and the two companies and to make sure budgeting and strategic plans are in place to support both March and Ash and CannaCraft.”