C3 Industries, a prominent cannabis operator based in Ann Arbor, Michigan, recently finalized a significant investment deal, securing $16 million for the development of a new cultivation facility in Connecticut. The 58,500-square-foot facility will be situated in East Hartford, with NewLake Capital Partners Inc., a real estate investment trust also based in Connecticut, facilitating the transaction. The property acquisition cost NewLake $4 million, with an additional $12 million allocated towards construction expenses.
This strategic expansion marks C3 Industries' entry into the Connecticut market, adding a fifth state to its operational footprint. This growth positions C3 as Michigan's largest multistate operator, particularly notable during a period when many in the industry are struggling. In stark contrast, C3 is on track to achieve $250 million in revenue this year, boasting a robust profit margin. This success is largely attributed to the company's cautious and methodical approach to growth, especially in the competitive Michigan market.
Ankur Rungta, CEO of C3 Industries, credits the company's success to its origins and operational strategies. "We started our business in Oregon, which was a really challenging market with oversaturation," Rungta explained. "Coming to Michigan, we built our largest platform. We've always been mindful not to expand production beyond what the market can sustain. This has been a breeding ground for disciplined operators and our conservative approach has certainly paid off."
The national cannabis market is currently experiencing significant financial pressures, with many multistate operators (MSOs) retracting operations in response to these challenges. For instance, New York-based Curaleaf has closed dispensaries in multiple states including Michigan, responding to a combination of high effective tax rates and aggressive regulatory environments.
C3 operates 11 of its High Profile Cannabis retail locations in Michigan, alongside outlets in Massachusetts, Missouri, New Jersey, and Illinois. Plans are underway to expand retail operations in Connecticut, where two new stores are expected to open, with additional acquisitions targeted in the near future.
The company's Michigan locations are particularly lucrative, generating nearly double the statewide average revenue per store. This success is largely due to C3's vertical integration strategy, where the company relies heavily on its own grown cannabis for its product line.
Despite these achievements, not all endeavors have been successful. C3 recently had to close its Flint location and sell its Ann Arbor dispensary, which was initially expected to be highly profitable. "That was painful to let go," Rungta remarked, highlighting the challenges even successful operators face in this volatile market.
Ankur Rungta, along with his brother Vishal Rungta who serves as C3's president and CFO, both hold degrees from the Stephen M. Ross School of Business at the University of Michigan. Ankur also holds a law degree from the University of Michigan Law School, bringing a strong educational background to his leadership role.
Looking forward, C3 is shifting towards an acquisition strategy, seeking opportunities in new markets such as Ohio. "We're now more focused on acquiring larger operating portfolios," Ankur Rungta shared, indicating a strategic pivot from organic growth to targeted acquisitions.
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