Cresco Labs (CSE: CL) (OTCQX: CRLBF) is buying Florida-based Bluma Wellness Inc. (CSE: BWEL.U) (OTCQX: BMWLF) in an all-stock deal valued at $213 million. Bluma Wellness operates as “One Plant Florida” and has seven strategically located dispensaries with eight more locations under legal control with plans to open.
“Our strategy at Cresco Labs is to build the most strategic geographic footprint possible and achieve material market positions in each of our states. With Florida, we will have a meaningful presence in all 7 of the 10 most populated states in the country with cannabis programs – an incredibly strategic and valuable footprint by any definition. We recognize the importance of the Florida market and the importance of entering Florida in a thoughtful way – we identified Bluma as having the right tools and key advantages for growth. Bluma is known for having best-in-class cultivation in the state of Florida, a differentiated retail experience and omnichannel offering with effective delivery, a clear pathway to scale and an incredible management team. We have a proven track record of integrating assets in strategic states, improving fundamentals, and amplifying operations to take share in the most competitive cannabis markets,” said Charles Bachtell, CEO of Cresco Labs.
The terms of the deal include Bluma shareholders receiving 0.0859 of a subordinate voting share of Cresco Labs for each Bluma Share held. The Exchange Ratio implies a price per Bluma Share of approximately $1.12, representing a premium of approximately 29% based on the closing price of Bluma Shares on the CSE as of January 13, 2021.
Last month, Bluma reported that its net revenue for the third quarter of 2020 increased by 47.7% from the prior quarter. The revenue growth was driven primarily by the organic growth of existing dispensaries and the opening of additional retail dispensaries in the third quarter. Additionally, One Plant Florida has seen a steady increase in the average price per gram of medical cannabis flower sold, attributable to the market’s continued recognition of One Plant Florida’s premium medical cannabis products. Net income for the third quarter of 2020 was approximately $300,000.
Bluma used to be called Sol Global, but in 2019 changed its name. The company explained that “Bluma” is an ancient Hebrew word that means to flower, bloom, r blossom. It selected this name based on a key principle of the business: to ensure that its patients and consumers utilize the plant-based products to enhance their daily lives, namely to bloom and thrive.
“Bluma’s high-quality cultivation operations, scaled delivery platform, and strategic retail investments combined with Cresco Labs’ track record of execution and capital allocation creates the best path forward to accelerate growth for our business in Florida,” said Brady Cobb, CEO of Bluma. “Our vision for Bluma and One Plant Florida has always been to cultivate remarkable experiences through exceptional cannabis. Our management team took the responsibility to seriously assess potential partners and we’re thrilled to be joining an organization that aligns operationally and shares our passion for creating quality cannabis products.”