Vireo Takes 86% Stake in Schwazze’s Convertible Notes in $62M Deal

DENVER – Vireo Growth Inc., a multistate Cannabis operator, has entered into definitive agreements to purchase about 86% of the senior secured convertible notes held by Medicine Man Technologies Inc., which operates as Schwazze, for roughly $62 million in company stock. The move comes as Schwazze navigates financial pressures in a competitive industry and positions Vireo to deepen its influence in key markets.

Under the definitive agreements, Vireo will buy the notes from third-party holders at a discount to their face value, issuing subordinate voting shares valued at $0.54 each to complete the transaction. The deal, expected to finalize by the end of October pending standard regulatory nods, underscores Vireo’s push to build scale through targeted debt plays rather than outright takeovers.

Schwazze, based in Colorado, runs retail and cultivation operations across five states, including strong footholds in its home market and New Mexico. The company has faced headwinds from high interest costs and slower-than-expected sales growth, prompting earlier talks of debt workouts with lenders like Chicago Atlantic Real Estate Finance. Vireo, meanwhile, focuses on medical and adult-use Cannabis in New York, Minnesota, and Ohio, where it has steadily expanded cultivation capacity.

This notes acquisition gives Vireo significant leverage over Schwazze’s capital structure without immediate control, allowing it to convert the debt into equity later if conditions suit. Investors see potential for quick value creation: one analysis pegs the purchase at one to two times Schwazze’s earnings before interest, taxes, depreciation, and amortization, setting up an accretive path forward, especially with Minnesota’s recreational market launch on the horizon. The equity payment structure also ties noteholders to Vireo’s upside, reducing conversion risks in the near term.

For the broader sector, the transaction highlights how debt holders are reshaping operator rosters. With many Cannabis MSOs, carrying elevated borrowing costs [often above 10%], acquisitions like this offer a cleaner path to consolidation than messy bankruptcies. Vireo’s approach, blending local execution with national ambitions, could serve as a blueprint as credit markets tighten further.

Here at Highly Capitalized Network, we view this as a calculated step that bolsters Vireo’s toolkit without overextending its balance sheet. If executed smoothly, it may accelerate synergies in overlapping regions, reminding operators that smart capital maneuvers often outpace raw expansion.