Green Thumb Industries Unveils the "High End" of Cannabis With This Classic New York Retailer

The emerging cannabis industry in the United States is really taking off -- as have the industry's investment bankers!

There have been an absolute slew of cannabis mergers in recent months, as the largest players join forces with others in complementary states, since it's still illegal to transport cannabis products over state lines. At the same time, every player is honing its strategy. Does the company emphasize products or retail locations? Technology or real estate? Market share, growth, or profitability?

The High End

Green Thumb Industries (NASDAQOTH: GTBIF), a U.S. cannabis company based out of Chicago, has definitely gone with an emphasis on products, taking a page out of the branded consumer packaged goods industry. The company's core products include Rhythm vaporizer pens, DogWalkers pre-rolls, and the Feel Collection tinctures.

Green Thumb isn't totally neglecting the four-wall retail space, either, but the company has chosen to bid on licenses only in states with a limited number of available licenses, therefore seeking to open its Rise-branded stores only in areas with limited competition. These include Pennsylvania, Ohio, Maryland, Illinois, and Massachusetts, with Florida on the way.

However, Green Thumb recently made a very posh acquisition that not only expands the company's geographic reach but also gets it into the "High End" of cannabis brands – literally.

Image source: Barneys.

The Hermes of marijuana

In February, Green Thumb acquired Beboe, a luxury cannabis brand founded in California in 2017. California is the largest U.S. market, but doesn't have a limitation on licenses, which is why Green Thumb had previously focused on other states. Nevertheless, Beboe products, which include rose-gold vaporizer pens, edibles, and CBD-infused drinks, have already earned their way into 125 retail locations in California and Colorado. The company was founded by fashion executive Clement Kwan and celebrity tattoo artist Scott Campbell, who has tattooed the likes of Johnny Depp and Jennifer Aniston and has been dubbed the "Hermes of marijuana" by The New York Times. 

At the time of the acquisition, Beboe had already inked a deal with luxury department store Barney's New York (Private) to open a new kind of head shop. The Beboe-Barney's luxury store is called the High End, and it opened on the fifth floor of Barney's flagship Beverly Hills store in late March.

The partnership is likely to be beneficial to both. Beboe gets exposure to clientele with disposable income more likely to pay premium prices for luxury cannabis goods, while Barney's generates some buzz for itself (pun intended), just as the legacy department store model is on the decline.

Unsurprisingly, Green Thumb is paying for Beboe in stock, though the exact terms weren't disclosed. The company did disclose in its press release that the amount was "non-material."

What Green Thumb gets

The deal does a number of things for Green Thumb. With one transaction it gains geographic exposure to the California and Colorado markets, as well as a high-end luxury brand to fill out its brand portfolio. Green Thumb is doing what many food and apparel companies have done, which is to amass a portfolio of brands geared toward different customer segments.