Curaleaf Holdings just pulled the plug on its $110 million plan to snap up key assets from The Cannabist Company in Virginia, blindsided by a sweeter $160 million offer from a hedge fund affiliate. This twist comes as Virginia gears up for adult-use marijuana sales next year, leaving investors wondering what’s next for these cannabis giants.
Less than three weeks after Curaleaf announced its bold move into Virginia’s growing cannabis market, the whole agreement crumbled. The New York-based company had agreed to buy The Cannabist Company’s vertically integrated medical cannabis operations, including five dispensaries and an 82,000-square-foot cultivation and processing facility.
Curaleaf cited a competing bid as the main reason for walking away, which valued the assets at $130 million in cash plus assuming a $30 million lease liability, totaling $160 million.
This higher offer came from an affiliate of Boston-based Millstreet Credit Fund LP, a hedge fund stepping into the cannabis space. Curaleaf’s press release on Friday made it clear they chose not to match the bid after careful review.
The original deal, announced in early December, aimed to give Curaleaf a strong foothold in Virginia, where medical marijuana is already legal and recreational sales could start as soon as 2026.
Details of the Competing Offer
The Cannabist Company, facing its own financial pressures, quickly pivoted to the new buyer. Their agreement with Millstreet’s affiliate includes selling all Virginia assets for $130 million upfront, with the buyer taking on that extra $30 million in lease costs.
This setup not only tops Curaleaf’s $110 million all-cash offer but also helps Cannabist reduce debt and streamline operations. Analysts point out that Virginia’s market is heating up, with projections from state regulators estimating adult-use sales could generate over $1 billion annually within a few years.
Curaleaf will walk away with a $3.3 million breakup fee as part of the termination agreement.
A quick comparison of the offers shows why Cannabist jumped ship:
- Curaleaf’s Bid: $110 million in cash, no lease assumption.
- Millstreet’s Bid: $130 million in cash plus $30 million lease takeover, effectively $160 million total value.
This shift highlights how competitive the U.S. cannabis industry has become, especially in states like Virginia transitioning from medical to recreational markets.
Impact on Curaleaf and Cannabist
Curaleaf, one of the largest multistate operators in the U.S., now faces a setback in its expansion strategy. The company operates in over 20 states and had seen Virginia as a prime opportunity to boost its East Coast presence. Without this deal, Curaleaf might need to explore other entry points, such as partnerships or new license applications, which could take time and resources.
On the flip side, this termination frees up capital for Curaleaf to invest elsewhere. Company executives noted in their statement that they conducted rigorous due diligence and decided the higher price wasn’t worth it. Investors reacted mildly, with Curaleaf’s stock dipping slightly but recovering by the end of the trading day.
For The Cannabist Company, this sale is a lifeline amid ongoing restructuring efforts. The company has been selling off assets to pay down debt, and this $160 million influx could help stabilize its balance sheet. Based in New York like Curaleaf, Cannabist has struggled with market challenges, including oversupply in some states and regulatory hurdles.
One key factor driving these moves is Virginia’s evolving cannabis landscape. The state legalized adult-use possession in 2021, but sales have been delayed due to political debates. Recent updates from the Virginia Cannabis Control Authority suggest retail operations might launch by mid-2026, creating urgency for operators to position themselves early.
Broader Market Implications
This deal’s unraveling underscores the volatility in the cannabis sector, where mergers and acquisitions can shift overnight due to better offers or changing regulations. Industry experts, including those from MJBizDaily, note that Virginia’s market potential has skyrocketed, attracting not just traditional cannabis firms but also financial players like hedge funds.
Hedge funds entering the fray signal growing mainstream interest in cannabis, potentially bringing more capital but also more competition.
For everyday consumers and patients in Virginia, this means continued access to medical cannabis through existing operators, but the adult-use rollout could see new players influencing prices and product variety.
Looking ahead, Curaleaf might refocus on states like New York or Florida, where it already has strong operations. Meanwhile, Millstreet’s move could pave the way for more non-traditional investors to buy into cannabis assets, diversifying the industry.
In a recent industry report from Brightfield Group, conducted in late 2025, U.S. cannabis sales are projected to hit $50 billion by 2028, with states like Virginia contributing significantly if recreational markets open smoothly. This data highlights why bids are getting aggressive.
The cannabis world is buzzing with this unexpected turn, showing how a single rival bid can reshape company strategies and market dynamics. As Virginia inches closer to full legalization, deals like this remind us that the industry is still maturing, full of surprises that could affect jobs, investments, and access to products for millions.