Deep Roots Harvest to acquire The Source assets

Nevada-based cannabis company Deep Roots Harvest signed an agreement to acquire most of the assets of The Source Holdings LLC, another Nevada cannabis operator, for an undisclosed price.

The deal includes five retail locations and three facilities for administration, cultivation, and manufacturing, but it excludes one retail store in Reno.

The Source has been a notable player in the Nevada cannabis market since 2015. Deep Roots Harvest, founded in 2014, currently operates five dispensaries across the state and plans to open a sixth store later this year.

The announcement follows Deep Roots’ recent buyout Silver State Relief, the Nevada subsidiary of C21 Investments Inc. (CSE: CXXI) (OTCQX: CXXIF), in a deal valued at $3.5 million.

C21’s CEO and president, Sonny Newman, said at the time that the move would allow the company to expand its retail footprint in Nevada.

C21 reported cash of $1.9 million at the end of the third quarter in December 2023. Despite a slight decrease in revenue due to a decline in wholesale business, the company experienced an increase in same-store sales.

The acquisition of The Source’s assets points to ongoing consolidation within Nevada, which reported a second year of contraction in fiscal year 2023, falling to $848.1 million in sales for the 12 months that ended June 30, 2023, according to the state’s Department of Revenue.

Despite that, companies continue to be drawn to the state, looking to expand their presence and capture a larger share of the Nevada market, which still ranks toward the top of the list when it comes to cannabis sales per capita due to its tourism industry.

A spokesperson for the company declined to comment on the latest deal, but said management would provide more details in a future press release.