Acreage Holdings Inc. (OTCMKTS:ACRGF) is expected to exit the marijuana market in the state of Iowa just two months after suspending wholesale operations. On Tuesday the company gave up its medical marijuana manufacturing license in the state.
The exit of Iowa necessitated by the focus in higher growth markets
Iowa is a small state that is sparsely populated and it only allows the sale and use of medical cannabis (CBD). Acreage which was operating as Iowa Relief was among the two cannabis products manufacturers in the state. With the company exiting the market, privately owned MedPharm will now be the sole cannabis operator in Iowa.
According to Marijuana Business Daily, Howard Schachter the company’s communications VP indicated that the exit is part of the company’s change of strategy. Schachter was quoted saying that the move was advised by the company’s announcement that going forward the focus for the company will be those markets with huge growth potential.
Acreage like most cannabis companies in the US was grappling a range of issues before the COVID-19 pandemic. In the wake of the pandemic, the company instituted a series of measures to cut costs that included dispensary closures, employee furloughs as well as the termination of a pair of its planned acquisitions.
Acreage to raise fresh capital of around $60 million
Recently the company took measures to shore up its finances through stock floatation to raise fresh capital of $60 million. The company will raise the amount by selling around $50 of Class A shares and through floatation of $10 million secured convertible debentures issued. The convertible debentures hold a 15% interest rate per year and they are secured through the company’s Connecticut dispensaries.
The announcement that the company will be leaving Iowa did not auger well with investors and the company’s stock as a result dropped 4.1% on Tuesday. This was a steeper drop relative to the decline in broader equity markets.