Curaleaf Holdings Inc. (CURA.CD), the most valuable U.S. marijuana company, is pushing into the Midwest to tap potentially lucrative markets that are taking shape in Michigan and Illinois.

Curaleaf, backed by Moscow banking veteran Boris Jordan, is buying Chicago-based Grassroots Cannabis in a cash and stock deal valued at about US$875 million. The shares surged as much as 14 per cent.

The acquisition gives Curaleaf, which has a market value of about US$3 billion, a presence in more states, including Illinois and Michigan, which have legalized recreational marijuana but don’t yet have stores open. The Midwest was a key hole in the company’s growing national footprint, Jordan said in an interview.

“This really fills in the map for us,” he said.

Curaleaf’s U.S. shares jumped as high as US$7.40 on Wednesday, in their biggest intraday gain in six weeks.

In the U.S. cannabis industry, large multistate operators are scooping up smaller companies as they race to build a national presence -- even as marijuana remains illegal at the federal level. In May, Curaleaf acquired a West Coast cannabis-oil maker in a deal valued at nearly $1 billion, the largest ever between two U.S. pot companies.

Acquisition Spree

That came after Cresco Labs Inc. (CL.CD) and Harvest Health & Recreation Inc. (HARV.CD), two public companies that compete with Curaleaf, each announced deals worth more than $800 million. Acreage Holdings Inc., another of the most valuable U.S. weed companies, agreed to be acquired by Canada’s Canopy Growth Corp. in April. The $3.4 billion merger, which would give Canopy access to the lucrative U.S. weed market, is contingent on the federal government changing its marijuana rules.

With the purchase of Grassroots, Massachusetts-based Curaleaf will have almost 70 operating U.S. marijuana dispensaries, expanding its footprint to 19 states from 12, and adding new markets also in Arkansas, North Dakota, Oklahoma and Vermont, according to a statement Wednesday.

It will have more revenue than the world’s most valuable cannabis company, Canada’s Canopy Growth Corp. (WEED.TO), according to Jordan. The transaction is expected to close in early 2020, Curaleaf said.

Curaleaf is “probably finished” with major acquisitions in the U.S., but is looking for a way into Colorado, Jordan said. That state, which has the longest standing adult-use marijuana market in North America, recently removed a restriction on investment from large multistate companies like Curaleaf.

Curaleaf has broader ambitions, Jordan said.

“If we want to be the biggest company globally we have to start looking at Europe,” he said.

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