Cannabist Company (OTCQB: CBST) to exit Virginia with $130m sale to Millstreet affiliate

The Cannabist Company Holdings Inc. (Cboe Canada: CBST) (OTCQB: CBSTF) has entered into a definitive agreement to sell its Virginia-based operations to an affiliate of Millstreet Credit Fund LP for a total consideration of $130 million. The transaction, which includes five operational retail dispensaries, one retail site under development, and a production facility in the Richmond area, represents a sharp strategic pivot away from a previously announced deal with Curaleaf Inc. and signals a deeper shift in the company’s capital allocation and operational priorities.

The deal was secured following a go-shop period in which The Cannabist Company evaluated alternative proposals. The transaction with Millstreet was ultimately deemed superior to the Curaleaf offer and led to the formal termination of that agreement on December 18, 2025. While the company will pay Curaleaf a $3.3 million break-up fee as a result, the broader strategic and financial implications of the Millstreet transaction appear more aligned with the company’s debt reduction goals and restructuring roadmap.

What strategic advantages led The Cannabist Company to abandon Curaleaf for Millstreet’s offer?

The sale of the Virginia assets is part of a wider strategic review being overseen by a special committee of independent directors tasked with evaluating options to address ongoing financial and operational challenges facing the company and the cannabis sector more broadly. The Cannabist Company is one of several multi-state operators in the United States responding to capital constraints, regulatory fragmentation, and margin compression by shedding non-core or capital-intensive assets.

The company’s Virginia subsidiary, Green Leaf Medical of Virginia, LLC, along with its parent Green Leaf Medical, LLC, will be sold in full to Parma Holdco LLC, an acquisition vehicle affiliated with Millstreet Credit Fund LP. The purchase price includes $117.5 million in cash payable upon closing, and an additional $12.5 million to be held in escrow to cover post-closing adjustments and indemnification liabilities. The buyer has already deposited $23.7 million into escrow to secure the deal.

How will the transaction with Millstreet improve The Cannabist Company’s balance sheet and debt outlook?

The transaction is subject to customary closing conditions and regulatory approvals, but no shareholder approval is required. The Cannabist Company expects the transaction to close in early 2026 or before. The proceeds from the sale are expected to be used to redeem part of the company’s outstanding debt, including its nine and one quarter percent Senior Secured Notes and nine percent Senior Secured Convertible Notes due December 31, 2028. Majority holders of these notes have already provided consent to the transaction.

The decision to accept Millstreet’s proposal over Curaleaf’s offer reflects a sharper focus on financial certainty, speed to close, and enhanced terms. While the Curaleaf deal, signed on December 1, 2025, provided a pathway for strategic collaboration in the Virginia market, the short go-shop window built into that agreement allowed The Cannabist Company to test for better alternatives. The Millstreet proposal was presented during this period and quickly emerged as more favorable both in structure and execution feasibility. By acting before the go-shop deadline expired on December 22, the company was able to secure a materially improved outcome and shift toward a more credit-aligned exit.

What cannabis infrastructure is included in the $130 million Virginia asset sale to Millstreet?

In terms of assets, the sale includes approximately 82,000 square feet of cultivation and production capacity in the Richmond region. This facility has been a critical hub for the company’s operations in Virginia, which is currently a limited-license medical market. The dispensary portfolio being sold includes five active retail locations and one more under development. These vertically integrated assets offer a compelling footprint for any buyer seeking to consolidate production and retail under one license in a high-barrier market, especially with the prospect of adult-use legalization remaining on the legislative horizon.

Why are multi-state cannabis operators like The Cannabist Company exiting low-margin markets?

For The Cannabist Company, the Virginia exit is not just a tactical divestment. It is an opportunity to strengthen the balance sheet, reduce exposure to markets with long regulatory timelines, and reallocate capital toward higher-return initiatives in states with adult-use potential or proven retail growth. The company operates in 12 jurisdictions across the United States, with 77 total facilities, including 61 dispensaries and 16 cultivation and manufacturing sites. Shedding underperforming or capital-intensive regions has become a defining trend among cannabis multi-state operators that are reorienting toward profitability over pure scale.

What does Millstreet Credit Fund’s acquisition signal about credit-driven M&A in cannabis?

Millstreet Credit Fund LP’s involvement underscores another emerging trend in the cannabis sector, namely the rising influence of private credit and distressed asset buyers in shaping the future of U.S. cannabis consolidation. Traditional private equity and venture capital have largely retreated from cannabis amid regulatory uncertainty and lack of federal banking reform. As a result, structured credit players like Millstreet have increasingly stepped into the gap, using debt-backed instruments and affiliate entities to acquire operational assets at attractive valuations.

In this instance, Millstreet is not just acquiring cash flow-generating assets but also securing regulatory entitlements, real estate, and cultivation infrastructure that would be costly and time-consuming to replicate. By entering through a fully permitted and licensed platform in Virginia, Millstreet positions itself for optionality as the regulatory and political climate evolves. If Virginia accelerates its path to adult-use legalization, this asset base could become significantly more valuable. If not, Millstreet still retains a vertically integrated business capable of generating modest but reliable medical cannabis revenues in a limited-license environment.

How are institutional investors responding to Cannabist’s asset monetization and debt reduction plan?

Institutional investors watching The Cannabist Company have been closely monitoring its liquidity, debt service obligations, and ability to monetize assets without diluting shareholder equity. The use of proceeds from this transaction toward note redemptions could relieve pressure on the company’s cash flows and enhance its credit profile. The fact that consent was secured from majority holders of both secured and convertible notes indicates that the capital markets view this transaction as a constructive move.

Moelis & Company LLC acted as financial advisor to The Cannabist Company in this transaction. Legal counsel included Stikeman Elliott LLP in Canada and Weil, Gotshal & Manges LLP along with Foley Hoag LLP in the United States. The multi-jurisdictional advisory team reflects the complexity and regulatory sensitivity of cannabis asset sales in the current environment.

Could the Virginia sale be a precursor to additional divestitures or a wider strategic reset?

The Cannabist Company, formerly Columbia Care, has undergone a significant rebranding and operational transition over the past several years. While once considered one of the original pioneers in U.S. multi-state cannabis operations, the company has faced mounting competition, tighter capital conditions, and shifting regulatory landscapes that have made aggressive expansion strategies increasingly difficult to sustain. Its current portfolio includes well-known product brands such as Seed & Strain, Triple Seven, dreamt, Hedy, Classix, and Press.

The launch of its Cannabist retail brand in 2021 marked an effort to unify its retail experience under a single national identity, supported by proprietary technology platforms. However, as the market matured, capital discipline and return on invested capital began to outweigh the benefits of sheer footprint expansion. The sale of the Virginia assets may serve as a bellwether for additional divestitures or even broader restructuring depending on market dynamics and ongoing evaluation by the board and financial advisors.

From an industry-wide perspective, the transaction reinforces a pattern of financially motivated asset reshuffling. Larger cannabis operators are increasingly focused on core markets, adult-use leadership, and capital-light growth strategies. Meanwhile, credit-oriented buyers are selectively entering distressed or underpriced markets where the long-term upside outweighs short-term regulatory inertia.

The Millstreet transaction is unlikely to be the last such move from The Cannabist Company or others in the space. As the U.S. cannabis sector continues to evolve amid tightening capital markets and slow federal reform, asset monetization, debt restructuring, and private credit deployment will define the next phase of industry consolidation.

Key takeaways on The Cannabist Company’s Virginia divestment to Millstreet Credit Fund

• The Cannabist Company Holdings Inc. is selling its Virginia cannabis business to an affiliate of Millstreet Credit Fund LP for $130 million, including five dispensaries and a Richmond cultivation site.

• The deal replaces a prior agreement with Curaleaf Inc. and results in a $3.3 million break-up fee, but provides stronger financial terms and faster closing dynamics.

• Of the total consideration, $117.5 million will be paid in cash at closing, while $12.5 million will be held in escrow for post-closing adjustments and indemnity coverage.

• The company plans to use the sale proceeds to redeem portions of its 2028 Senior Secured Notes and Convertible Notes, which has already received noteholder consent.

• This divestment aligns with a broader strategic review as The Cannabist Company seeks to optimize its portfolio, reduce leverage, and prioritize core adult-use markets.

• Millstreet’s entry into the Virginia market through this acquisition highlights a growing role for credit funds in cannabis M&A, particularly where equity capital is scarce.

• Regulatory approvals remain a condition for closing, but no shareholder vote is required, which expedites transaction execution.

• This transaction may set a precedent for further strategic exits or distressed asset sales across the U.S. cannabis industry as operators seek financial stability.