April 6, 2022, 1:22PM
Updated 1 hour ago
CannaCraft, the Santa Rosa-based cannabis pioneer that has carved out a niche in the marijuana industry by producing innovative products from vape cartridges to drinks, is planning to merge with San Diego-based March and Ash, which operates a string of retail outlets in Southern California, a company spokesman confirmed Wednesday.
The two businesses will be under the holding company of Groundwork Holding Inc., but they would operate as separate companies under the structure, said the spokesman, who did not provide any additional details. The deal was first reported by Forbes. Company executives did not get back to The Press Democrat by deadline despite repeated requests for comment.
CannaCraft was founded in 2014 by Ned Fussell and Dennis Hunter. Hunter learned as a young adult to grow cannabis in Mendocino County and later spent more than six years in prison on pot-related convictions early this century. During his time in prison, Hunter took UC Berkeley Extension courses in real estate and appraisal for a future business career.
The company is a leading local producer of a range of products, using its research team to find creative ways to extract oils to make into products such as chocolates, vapor cartridges and gummies. The products are based on a formula on a mixed ratio of cannabidiol (CBD), a cannabis compound that has been used more as pain relief to treat aches, and tetrahydrocannabinol (THC), a principal psychoactive chemical in cannabis. It also grows marijuana and has a large cultivation site in Lake County.
The company operates out of a west Santa Rosa facility where it produces more than 200 products. Its plant was the subject of a 2016 police raid that was later settled with prosecutors. CannaCraft subsequently grew in the aftermath of the November 2016 ballot initiative that legalized adult use within California even though it remains an illegal substance under federal law. In 2018, the company hired Bill Silver, then dean of Sonoma State University’s School of Business and Economics, as its chief executive officer to help chart its growth. He left the company last year.
Most notably, it has worked with Lagunitas Brewing Co. of Petaluma to develop cannabis drinks that are sold through licensed dispensaries. The two recently released a new version earlier this year of their Hi-Fi Sessions brand as that product category is slated to grow from more than $200 million in 2021 to $2.4 billion in 2026, according to BDSA, a leading market research firm covering the legal cannabis market.
The merger makes sense as it will lead to one company that will be completely vertically integrated from seed to sale, said Erich Pearson, chief executive officer and chairman of SPARC, which also has such a business that is fully integrated and with major operations in Sonoma County.
“When you put those two companies … it makes it a more profitable business,” Pearson said.
There should be more such deals coming in the future given the financial pressures within the sector, he said. The complaints include a high burden of taxes; the overall lack of dispensaries and a massive drop on the wholesale price for weed by as much as 50%, as illegal pot from states including Oregon and Oklahoma have come into the state.
“We are going to see it moving in that direction,” Pearson said.
This is a developing story. Check back later for more details.
Business, Beer and Wine, The Press Democrat
In the North Coast, we are surrounded by hundreds of wineries along with some of the best breweries, cidermakers and distillers. These industries produce an abundance of drinks as well as good stories – and those are what I’m interested in writing. I also keep my eye on our growing cannabis industry and other agricultural crops, which have provided the backbone for our food-and-wine culture for generations.