Spherex to Acquire Two Colorado Cultivation Facilities

Spherex has agreed to acquire two cannabis cultivation facilities from The Cannabist Company and its affiliates, The Green Solution (TGS) and Rocky Mountain Tillage (RMT), expanding its operations into cultivation and giving the Colorado cannabis brand greater control over its supply chain.

The transaction, announced Oct. 6, marks Spherex’s first acquisition and comes as The Cannabist Company restructures its business.

The acquisition includes an indoor cultivation facility in the Denver area and an outdoor cultivation operation in Trinidad, Colorado. Approximately 60 employees from the facilities are expected to join Spherex, increasing its workforce to nearly 100.

“This is a growth move for Spherex, but it’s also the result of how deliberately we’ve built this business over the past 11 years,” said Dan Gardenswartz, president of Spherex. “We’ve stayed focused on what we do well, maintained financial discipline and built strong relationships across Colorado’s cannabis industry. When this opportunity became available, we were in a position to act. We know these facilities, we know the quality of the material they produce and we know many of the people behind them. Bringing those capabilities into Spherex takes our operational philosophy to the very start of the supply chain and gives us new ways to better serve our retail partners and end consumers. Ultimately, we are investing in the long term success and prosperity of our industry, which directly benefits our business, our peers, our customers and the State of Colorado.”

Spherex has sourced cannabis material from TGS for years. The acquisition will bring cultivation in-house, giving the company greater oversight of its raw material supply and helping it manage production and product consistency.

The company cited supply constraints earlier this year that created production backlogs and delayed orders. It said declining cultivation capacity in Colorado has contributed to fluctuations in raw material availability, cost and compliance.

Ryan Hunter, chief strategy officer of Spherex, said the acquisition could help the company maintain product availability while providing flexibility to develop products and enter categories as opportunities arise.

“Ultimately, everything comes back to the consumer and their experience. Greater stability in our supply chain means greater consistency in the products we make and greater confidence that those products will be available when our customers want them. It also gives us the flexibility to explore new products and categories as opportunities emerge,” Hunter said.

Spherex plans to retain the existing leadership teams at both cultivation operations to oversee day-to-day activities. The company expects the facilities to operate under the Spherex umbrella after the transaction closes.

Hunter said the acquisition will also allow employees at both facilities to continue their work under new ownership.

“We’re especially proud of the people side of this,” Hunter said. “There are talented teams already doing good work at these facilities, and this transaction allows that work to continue. We’re not coming in because these operations need to be rebuilt from scratch. We see strong teams and strong capabilities that we can build on while welcoming them into the culture we’ve worked hard to create at Spherex.”

The company also said it will maintain relationships with independent Colorado cultivators as it integrates the facilities. Spherex expects to use a combination of internally produced cannabis material and supplies from outside cultivation partners.

“We tremendously value the partnerships we’ve established over the years, and those relationships remain important to our business,” Hunter said. “This acquisition gives us another source of predictability and stability in our supply chain. It doesn’t change the respect we have for the partners who have helped Spherex grow into the company it is today.”

Spherex said customers should not expect immediate changes following the transaction. The company plans to maintain its existing sales teams, products and customer contacts.

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