Boehner-backed Acreage Holdings acquires Michigan cannabis company

The cannabis company whose board includes former U.S. House Speaker John Boehner wants to light up Michigan.

New York City-based Acreage Holdings said this week it acquired Michigan-based Blue Tire Holdings LLC in a move that marks the maturing cannabis industry in the state and could create increased competition for small businesses. 

"Michigan has been a state we’ve been excited to get into for a long time," Acreage President George Allen said. "Michigan has been on the forefront of cannabis, and we're proud to be a part of the cannabis heritage that is growing."

Acreage, one of the largest cannabis companies in the country, is bringing its expertise and financial resources from across 40 dispensaries in 18 states. For an undisclosed amount, the company, which is publicly traded in Canada, has purchased Blue Tire's portfolio of real estate assets suited for building large-scale vertical operations across the state.

"People like Acreage can set the standard and kind of bring structure to a system that has no structure in the state of Michigan," Blue Tire's Chief Medical Officer Dr. Saqib Nakadar said. "A group like ours meets a larger corporation and are able to make something special happen."

Allen declined to comment on how many properties Acreage acquired. He said the company is pursuing a "fully distributed model" with an investment of tens of millions of dollars into cultivation operations, processing centers and up to 15 dispensaries that will include medical and recreational marijuana.

The Board of State Canvassers Monday certified the passage of Proposal 1, which legalizes recreational marijuana in Michigan. The proposal goes into effect on Dec. 6, but the state has a year to develop the framework for recreational sales. On Tuesday, lawmakers approved permanent medical marijuana licensing rules, including delivery to cardholders' homes.

Allen said Acreage has been interested in Michigan for years, though the legalization of recreational marijuana opens up further opportunities.

He said measures taken by the state to move the industry from a caregiver model where dispensaries are individually operated to a more institutionalized approach has made it possible for the company to enter the Michigan market. That includes state licensing and consistent regulation.

"The state values the control and the consistency that larger operators can bring to the state versus caregivers," Allen said. "Really that commitment was what greenlighted it for us. The state has imposed a statewide licensing program that we believe has created more of a level playing field for companies like us to participate."

Barton Morris, founder of the Cannabis Legal Group in Royal Oak, said Acreage's move brings a significant amount of capital and infrastructure into Michigan whose cannabis market still is only developing.

"We don't have an industry yet," Morris said. "It's not mature. We're just now getting into that. We haven't seen our industry take off. When it does in 2019 and 2020, people are really going to see what we see in Colorado and California: Large chains of provisioning centers with multiple locations that provide a good service and grow their own product at a low cost."

Morris said there could be some obstacles though. To obtain a state license, companies need to disclose the background of all of their owners. For publicly traded companies, that could be thousands of people.

Nakadar said that could present a challenge for Acreage, though the company is focusing on acquiring and developing properties for eventual clinical use over the next few years.

Allen said the company, however, is well-positioned to obtain municipal licenses in Detroit, Bay City, Battle Creek, Lansing and Ann Arbor.

The existing property portfolio includes a 55,000-square-foot facility in Flint that will serve as a large-scale, mixed-use indoor facility to cultivate high-end cannabis, provide manufacturing and packaging services, and serve as the company's flagship retail location. A 30-acre property in Vassar will provide space for a licensed greenhouse and processing facility.

Morris said the step by Acreage into Michigan could provide some concerns for small-scale operators. He said those who vertically integrate their business with cultivation, processing and provisioning have a better chance of creating their own market. The recreational proposal also allows for micro-businesses that vertically integrate 150 or fewer marijuana plants without having to obtain three separate licenses.

"That will preserve the small business model," Morris said. "Both can operate in Michigan."

bnoble@detroitnews.com