Big St. Louis-based Cannabis firm to expand with acquisition
St. Louis-based Proper on Tuesday announced its acquisition of Nirvana Investments, a Fenton-based cannabis holding company that operates four dispensaries in the St. Louis area under the N’Bliss banner, located in Festus, Ellisville, Manchester and House Springs.
Until the deal is approved by the state, Proper will manage Nirvana Investments and its subsidiaries through a management service agreement, Pennington said.
As a result, Nirvana’s dispensaries will initially undergo a soft rebrand — operating as “N’Bliss Powered by Proper” — before being absorbed into the Proper Cannabis dispensary banner further down the road, Pennington said.
Proper currently operates five dispensaries, four of which are in the St. Louis region in Bridgeton, Crestwood, South County and Warrenton. Proper’s fifth dispensary is in downtown Kansas City.
Proper will continue to employ "the majority to all” of Nirvana’s approximately 100 employees, Pennington said. Proper will employ about 360 employees total after the acquisition is finalized, up from the about 260 workers it currently employs, he said.
Terms of the acquisition weren’t disclosed. Pennington offered that the acquisition was completed through a mix of cash and stock, and he said that Nirvana’s owners will become shareholders of Proper.
Pennington said he has been friends with Nirvana Chief Executive Bradford Goette for years, adding that the two had discussed a merger or acquisition many times over the span of “a couple of years.”
Those conversations became more serious last summer, he said, and the two companies reached the terms of the acquisition earlier this year, around February or March.
In addition to its four dispensaries, Proper will acquire Nirvana’s manufacturing license — through which it operates 5150 N’Fusion, a cannabis extraction and infusion company — and its transportation license under which it operates Bold Lane Logistics, a company that transports cannabis to growers, manufacturers, retailers and consumers throughout the state.
The acquisition of Bold Lane Logistics will allow Proper to begin offering delivery service of its cannabis products, which is currently in the works, Pennington said.
Once the deal is finalized, Proper will in total have nine retail licenses, two manufacturing licenses, two transportation licenses and two cultivation licenses.
The deal will make Proper Cannabis the largest Missouri-owned cannabis company in the state, Pennington said.
Expansion in a growing market
Missouri’s recreational cannabis market has outperformed other recently launched, adult-use markets since it came online earlier this year.
The state, which had an oversupply of cannabis at the beginning of the year, has seen higher-than-expected demand and sales in the past five months cause a supply crunch, prompting wholesale prices to skyrocket and retailers’ profit margins to shrink.
Pennington said that Proper’s acquisition of Nirvana will help the company meet heightened demand, as it will allow the company to increase its overall supply and build out its logistical capabilities.
Proper currently records about 60,000 transactions per month at its dispensaries, and Pennington said he expects this number to jump to more than 100,000 transactions per month following the acquisition.
The state, which the Missouri Department of Health and Senior Services previously said was producing cannabis at 37% of its total capacity, has also seen multiple of its largest cannabis companies undergo expansion projects since Amendment 3, which legalized marijuana sales for recreational use, passed in November.
Pennington said that Proper is building out an expansion at its cannabis-growing facility in Rock Hill. The company currently has about 18,000 square feet of canopy, and Pennington said he expects the company to have more than 30,000 square feet of canopy available for use before the end of the year.
