By Chloe Aiello

U.S. cannabis producer Curaleaf has agreed to acquire Chicago-based Grassroots for $875 million in cash and stocks, cementing the industry giant's presence in what promises to be a booming Midwestern cannabis market.

The deal expands Curaleaf's presence to 19 states, from 12, and extends its footprint into key markets like Ohio, Pennsylvania, and Illinois, which just became the 11th U.S. state to legalize recreational cannabis. The new combined company will have 131 dispensary licenses, 68 retail and medical locations, 20 cultivation sites, and 26 processing facilities, and will have access to as many as 200 million potential customers nationwide. According to Curaleaf, the deal solidifies its position globally as the largest cannabis company by revenue.

"The cannabis industry is dynamic, fast growing. The U.S. is the best market in the world, and we believe we are in a position to be a leader in worldwide cannabis," Joe Lusardi, CEO of Curaleaf, told Cheddar.

The $875 million acquisition is the second deal of its scale involving a Chicago-area cannabis company. Harvest Health & Recreation, a leading Arizona-based multistate operator, acquired Verano Holdings for $850 million in March, in what was then the largest U.S. cannabis acquisition until now.

Illinois is gearing up for recreational sales come Jan. 1, 2020, after Gov. J.B. Pritzker signed into law one of the most progressive legalization bills to-date. The market in Illinois is projected to grow exponentially by 2023, rivaling more established states like Nevada and Colorado, according to the Brightfield Group.

"It's complementary to our strategy, which is to be the biggest cannabis company in the world. We had a footprint up and down the East Coast and on the West Coast, and Grassroots had a vertical footprint in the middle of the country, so key states like Illinois, Pennsylvania, Ohio," Lusardi said.

Curaleaf has been growing by leaps and bounds in tandem with explosive growth in the cannabis industry. About 62 percent of Americans now support cannabis legalization, according to Pew research. Nationwide, 11 states and D.C. have legalized recreational cannabis and some 33 have legalized medical cannabis.

"We have a thesis on cannabis that popular attitudes are going to improve on cannabis continually. More and more states are going to have cannabis regulations, and they're going to be more favorable. For us our focus is on continuing to put down a footprint in markets that are going to accept cannabis use, and we think that from that perspective the horizon looks pretty good," Lusardi said.

Less than three months ago in May, the company announced its acquisition of Cura Partners in a $948 million stock deal that grew the company's presence on the West Coast. Its recent deal is just the latest in an M&A tear among companies in the U.S. and Canadian cannabis industries ー and Lusardi said that consolidation trend won't likely be stopping any time soon.

"We built our company through acquisition and organic growth at the same time, which is obviously a challenge. What I would say is its a highly fragmented market, given the state-by-state nature, and you will likely see more consolidation over time," he said.