Parallel has entered into a definitive agreement to acquire, in a cash and stock transaction, certain operations of Windy City Cannabis, comprised of Posen Dispensary Holding Company, LLC, Homewood Holding Company, LLC, Homewood 2nd Site Holding Company, LLC, Posen 2nd Site Holding Company, LLC and Compass Dispensary Holdings, LLC.
Windy City is a leading operator of adult-use and medical cannabis dispensaries in Illinois. This follows Parallel's announcement in February that it intends to become a public company through a definitive business combination agreement with Ceres Acquisition Corp., a special purpose acquisition corporation.
Subject to regulatory approval as discussed below, Parallel is expected to own six Illinois dispensary locations, which will expand Parallel's active operations to six high-growth, limited license states: Florida, Massachusetts, Texas, Pennsylvania, Nevada and Illinois.
"The acquisition of Windy City enables Parallel's entry into Illinois, one of the best performing cannabis markets in the U.S. to date,” said William “Beau” Wrigley, Jr., chairman and CEO of Parallel. “This transaction gives Parallel the chance to build upon Windy City's neighborhood retail brand presence to bring customers well-being through cannabis products. We also intend to continue to have a positive impact in Windy City's local communities by creating jobs and investing in employees. We have been closely following the successful launch of adult-use cannabis in Illinois since January 2020 and believe that Windy City has assembled a highly attractive footprint, including four dispensary locations in the greater Chicago region. Inclusive of Windy City's additional site locations opening later this month, Parallel is expected to have one of the largest retail footprints in Illinois among U.S. cannabis operators."
Windy City currently operates dispensaries in Homewood, Highwood, Posen and Litchfield, Illinois. Windy City is expected to open an additional two adult use dispensaries in Carpentersville and Macomb later this month.
"The Windy City retail brand provides a welcoming, neighborly ambiance and a dynamic dispensary experience to customers ranging from the cannabis connoisseurs to the newly curious,” said Windy City CEO Steve Weisman. “Parallel was the right choice to partner with because they share our focus on what cannabis can do to help improve the well-being of people's lives and our commitment to investing in the communities we serve. They also share our passion for customer service, high compliance standards and operational excellence. I'm confident that they will continue to drive equitable, diverse growth opportunities within our communities by creating jobs and supporting positive change."
Parallel has agreed to acquire Windy City for consideration of $100 million, comprised of $60 million in cash and $40 million in Parallel stock, with total potential consideration of up to $155 million inclusive of certain performance-based earn-out payments payable through 2023.
Consideration offered in Parallel stock will be issued following the expected closing of its business combination with Ceres and resulting public listing. Windy City is expected to generate in excess of $75 million of annualized net revenue in 2021. Subject to the satisfaction of customary closing conditions and regulatory approvals, the Windy City transaction is expected to close in the second half of 2021.
The closing of the Windy City transaction is contingent on, among other things, the approval by the Illinois Department of Financial and Professional Regulation, the state of Illinois' cannabis authority, to transfer the equity of the licensed entities from Windy City to Parallel.