Nevada’s Deep Roots closes on Source acquisition

The deal adds four dispensaries and a lounge license for Deep Roots as regulators try to kickstart its cannatourism plans.

Deep Roots Harvest officially closed on its acquisition The Source’s assets, rescuing the company from receivership amid broader consolidation in the Nevada market this year.

The deal provides Deep Roots with retail locations in Las Vegas, Henderson, North Las Vegas and Pahrump, along with two provisional licenses – including one for a cannabis consumption lounge – and a cultivation facility, the company said Monday. Financial terms weren’t disclosed.

“With the completion of this deal, we have an opportunity to lead the next phase for the cannabis industry in Nevada,” Deep Roots CEO Jon Marshall said in a statement.

Deep Roots will maintain The Source’s retail branding while consolidating cultivation and production operations across both companies. The merger creates one of the state’s largest operators, with “more than 400 employees statewide” and one of the state’s bigger cultivation facilities.

The company also snapped up a consumption lounge license, as the state ramps up its cannatourism initiatives. Regulators doled out six new lounge permits in August, with 38 more venues in the pipeline. Lawmakers are also considering allowing temporary pop-up lounges at festivals and events.

The Source had been under receivership since mid-2023. Jacques Santucci of Opus Consulting, who served as receiver, said in a news release that it was “incredible to conclude this deal and let the teams get to work serving the needs of Nevada consumers.”

The deal adds to the growing list of M&A activity in the state market this year as business slowed down when pandemic-era spending came to a close. California distributor Nabis entered Nevada in February through its Blackbird acquisition, while Body and Mind made a $2 million market exit to focus on markets in the East. Deep Roots itself sold its Reno dispensary to Silver State Relief for $3.5 million in March.

Still, Nevada seems to be bouncing back from two consecutive years of slumping sales, with regulators projecting busier days in the distance. Monthly sales hover around $70 million, state data show, down from pandemic-era highs of $95 million in April 2021.

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