NETA sold to national marijuana company

  • The exterior of New England Treatment Access, or NETA, is shown June 27, 2018 in Northampton.

  • Rosa Topping, a patient service associate, organizes the information pages for the products that would be sold at NETA in Northampton before the store opened to recreational marijuana customers in November. GAZETTE FILE PHOTO/CAROL LOLLIS

Staff Writer
Published: 1/14/2019 10:26:05 AM

NORTHAMPTON — New England Treatment Access, the Massachusetts marijuana company whose Northampton store was one of the state’s first two recreational dispensaries, has been sold to a cannabis company with a growing national footprint.

Surterra Wellness, a Georgia-based company and one of Florida’s largest legal marijuana businesses, announced Monday that it had acquired NETA in a cash and stock transaction. The deal, which still has to be approved by the state’s Cannabis Control Commission, is one of the biggest acquisitions ever for the U.S. marijuana industry, according to Surterra, which has operations in Florida, Texas and Nevada. The company declined to say how much it paid for NETA.

Marijuana businesses are consolidating across the country, with NETA becoming the latest to partner with another successful cannabis company. Speaking shortly before boarding a plane to Florida to finalize the deal, NETA co-founder Kevin Fisher said his company has had plenty of offers to sell over the years. Looking at the current consolidation in the industry, it made sense to sell at this time, he said.

“With an eye toward the future, we wanted to make sure we had the resources and expertise to stay who we are,” he said, adding that increasing the company’s scale was a big reason for selling.

In addition to its recreational store in Northampton, NETA also operates a dispensary in Brookline — where Fisher said the company hopes to receive a recreational license — and a processing and cultivation facility in Franklin.

The deal represents expansion into a new market for Surterra, a company that Fisher said is similar in size to NETA. But Fisher said the expertise that Surterra brings to the table is experience running a much larger company.

“I’m not Bill Wrigley,” Fisher said, referring to Surterra CEO William “Beau” Wrigley Jr., an heir to the Wrigley’s chewing gum fortune and the former CEO of the Wrigley Co. “I want to be clear, this isn’t an exit for us. This is a partnership.”

In a statement, Wrigley said Surterra is thrilled to partner with NETA in Massachusetts, which he said is expected to be one of the country’s most quickly expanding markets.

“With operations combined across four states, Surterra is positioned to grow tenfold in 2019 and realize significant profitability,” Wrigley said.

Surterra is far from a mom-and-pop shop. In a private equity firm’s confidential pitch to investors — obtained by the Miami Herald — Surterra Florida projected in May of 2017 that its revenues would hit $138 million by 2021. In its press release Monday, Surterra said it raised over $200 million in funding in 2018.

The company looked at a variety of opportunities before acquiring NETA, according to Jay Holmes, executive dirctor of Surterra Wellness and a member of the company’s board of directors.

Surterra’s plan is to operate NETA “business as usual,” Holmes said. He said there will be no changes to management, though staffing may expand in the future.

Northampton Mayor David Narkewicz seemed unfazed by the news, which he had learned earlier in the day.

“This is obviously a rapidly growing industry across the United States, so I’m not really surprised that there’s this type of movement happening in the industry,” Narkewicz said, stressing that he doesn’t expect the sale to have much impact in Northampton. “I don’t think we’ll see any immediate change here.”

Narkewicz noted that this isn’t the first instance of marijuana industry consolidation in Northampton. Just Healthy LLC, the Boston-based business planning to open a dispensary in the city and a medical marijuana growing and processing facility on Ryan Road, was acquired in December by Green Growth Brands, an Ohio-based firm that has been expanding.

As for NETA’s relationship with the city, Narkewicz said nothing will change. The host community agreement struck with the city remains in place, and the business will continuing paying the same local tax of 3 percent of sales and the same 3-percent “community impact fee.” He also expects no change in how the city will interact with NETA.

“They’ll still have their local employees and local management, so I don’t think it is something people should be alarmed about,” Narkewicz said.

Fisher, NETA’s co-founder, will be joining Surterra’s board as part of the deal. He said the acquisition won’t negatively impact the company’s approximately 450 employees, who will now be offered a 401(k) and stock purchase program as part of their employment.

Fisher stressed that customers won’t notice any short-term changes at NETA, besides some Surterra products that will likely appear on the shelves. Surterra made headlines last fall when it announced a licensing deal with the singer Jimmy Buffett’s Margaritaville company to sell “Coral Reefer” branded marijuana products. Holmes said that is one product that could eventually appear on NETA’s shelves.

“I can’t speak to five years down the line,” Fisher said of potential future changes.

Staff writer Greta Jochem contributed to this report.

Dusty Christensen can be reached at dchristensen@gazettenet.com.


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