Our Response to the High Fidelity Acquisition

On Monday, June 28, Vermontijuana broke the news that Slang Worldwide would acquire High Fidelity, the parent company to CeresMD, Vermont’s only independent medical cannabis dispensary company. With this acquisition, Vermont will no longer have an in-state cannabis company operating in its medical market nor leading its adult-use marketplace.

“Slang’s Monday press release details the assets of their acquisition, including a 28,000 sqft indoor production facility with a 50,000 sqft expansion due by 2022. That means at least one of the three Integrated license holders will have a 78,000 sqft indoor production facility operating and ready for the first day of sales on May 1. ”

It comes as no surprise to read in Vermontijuana this past Monday, June 28, that High Fidelity has been acquired by Slang Worldwide, a Canadian-based corporate multi-state operator, or, as they describe themselves, the industry leader in branded cannabis consumer packaged goods. As a result of this deal, there will no longer be a local Vermont-based license holder in the medical market nor a Vermont-based company eligible for the Integrated license, the license type in Act 164 currently designed to lead the emerging adult-use market.

High Fidelity is the parent company to Ceres Natural Remedies CBD, Champlain Valley Dispensary, and Southern Vermont Wellness, both medical dispensaries recently rebranded as CeresMD. As reported by Vermontijuana, High Fidelity is a Vermont corporation that holds two of the five medical dispensary licenses in the state and totaled $35 million in revenue since 2013. Slang Worldwide proposed a $25 million takeover of High Fidelity and its subsidiaries.

Slang's Monday press release details the assets of their acquisition, including a 28,000 sqft indoor production facility with a 50,000 sqft expansion due by 2022. That means at least one of the three Integrated license holders will have a 78,000 sqft indoor production facility operating and ready for the first day of sales on May 1. That is the recipe for market saturation and entirely inappropriate for Vermont. A singular 78,000 sqft indoor production facility should not exist in Vermont, especially at market rollout, and will likely threaten the overall viability of our entire adult-use market. Moreover, highly capitalized cannabis companies have a track record of undervaluing products, since they can absorb loss better than a small business, and now we have three of them leading the emerging adult-use market.

Vermont's medical and adult-use cannabis markets should be lead by Vermont-based companies, local small farms, and businesses, not three out-of-state conglomerates. The market is an opportunity for Vermonters to generate wealth, too, that must not be lost. This corporate takeover is an unhealthy direction for Vermont's cannabis markets, introducing potentially troubling implications, especially to the forming adult-use market. Consequently, we denounce the acquisition of High Fidelity and sound a public alarm on the overall direction the markets appear to be heading.

There are ten months and an entire legislative session before Integrated license holders are allowed to sell to the public, which also leaves plenty of time for the new Cannabis Control Board to address inequalities and rein-in inappropriate behavior. If nothing else, this corporate takeover will draw further daylight for regulators and lawmakers to the shortcomings in Act 164 and the need to enact appropriate regulations, such as statewide production caps, to help ensure equity and viability in the new marketplace.