Greenrose SPAC Buys Four Properties In $210 Million Move

Cannabis SPAC (special purpose acquisition company)  Greenrose Acquisition Corp. (NASDAQ: GNRSU, GNRS, GNRSW) has entered into definitive agreements to acquire four cannabis companies, which it has dubbed The Platform. The companies are Shango Holdings Inc. (Shango), Futureworks LLC (d/b/a The Health Center), Theraplant, LLC, and True Harvest, LLC. The total initial transaction value is $210 Million with a maximum earnout of $110 million. Greenrose plans to initiate an offering of $150 million in equity and debt securities and plans to use the net proceeds for the acquisition of the Platform and general corporate purposes.

Greenrose said it will be renamed The Greenrose Holding Company Inc. and is expected to transition its listing from the Nasdaq Capital Market to the OTCQX Best Market. Additionally, Greenrose intends to list on the NEO exchange after the close of the transaction. The Platform will have operations in seven states, including nine dispensaries and over 300,000 sq. ft. of cultivation producing approximately 120,000 lbs. of flower per year. The pro forma 2021 revenue and adjusted EBITDA guidance is $158 Million and $56 Million, respectively.

“The companies we are bringing to market fully align with Greenrose’s core objectives,” said Mickey Harley, CEO, and Director of Greenrose. “We are targeting strategic assets in several key states that present opportunities for further consolidation as we seek to deepen our presence, particularly in the West. Additionally, we are entering high growth, limited license markets, and newly recreational markets. The Platform provides significant revenue, Adjusted EBITDA, and cash flow right out of the gate, which we expect will help us drive our growth strategy.

“Across the Platform, we are targeting acquisitions with the highest quality retail alignment and superior cultivation capabilities, selling the most reputable products in their respective markets at premium prices. On a state-by-state level, we plan to build upon high growth, limited license markets like Nevada, as well as newly recreational and limited license markets like Arizona and Michigan. In emerging medical markets with recreational potential like Connecticut, where our company is generating strong cash flow, we are excited about this growth potential as the market evolves. In established but highly fragmented markets like California, Colorado and Oregon, the goal will be to take advantage of the consolidation opportunities those markets offer, recognizing the favorable risk-reward dynamics of such markets vis-à-vis the newer, limited license markets. We also anticipate evaluating select distressed and undervalued assets.”

Platform Overview by State

STATE FOOTPRINT AND HIGHLIGHTS
Arizona One 74,000 ft² cultivation facility and one processing facility
California One dispensary, one distribution business
Colorado Three dispensaries, three cultivation facilities with 58,500 ft² of total cultivation capacity and one processing facility
Connecticut One 68,000 ft2 combined cultivation, processing, manufacturing and packaging facility under expansion to add another 30,000 ft2; one of four exclusive growers statewide
Michigan Three dispensaries, one 25,000 ft² cultivation facility and two processing facilities
Nevada One dispensary, one 20,000 ft² cultivation facility with room to expand to 50,000 ft² and one processing facility
Oregon One dispensary and an additional dispensary license, two cultivation facilities totaling 10,000 ft² of indoor capacity and 3

Paul Otto Wimer, Greenrose President, commented: “Our collective executive management team has extensive M&A experience and has multi-decade experience in business leadership, operational management and corporate finance. We expect the potential pipeline of longer-term opportunities to expand now that recreational legalization has become more widespread following the 2020 election. As we develop and expand our Platform, we plan to leverage the experience of our combined management team and our scale to accelerate growth.”

Company Key Geography and Assets Highlights
Shango
  • Arizona, California, Michigan, Nevada, Oregon
  • Six dispensaries and one additional Oregon license
  • Four cultivation and three processing facilities
  • Vertically integrated in Michigan with three dispensaries, 25,000 ft2 cultivation facility and two processing facilities
  • Vertically integrated in Nevada with one dispensary, one 20,000 ft2 cultivation facility, with current expansion of an additional 30,000 ft2, and one processing facility all within a 72,000 ft2 facility
  • Vertically integrated in Oregon with one dispensary and two cultivation facilities with 10,000 ft2 of total indoor cultivation capacity and 30,000 ft2 of total outdoor cultivation capacity
  • Agreement to manage True Harvest’s Arizona cultivation operations
  • One dispensary and distribution company in California
The Health Center
  • Colorado
  • Three dispensaries
  • Three cultivation facilities and one processing facility
  • Cultivation assets with total capacity of 58,500 ft2
  • Vertically integrated assets to anchor horizontal consolidation of market
  • Focus on the Denver metro marketplace
  • High-end products at affordable prices
Theraplant
  • Connecticut
  • One combined cultivation, processing, manufacturing and packaging facility
  • One of only four growers in Connecticut
  • High barriers to entry
  • Cultivation facility with 68,000 ft² of current capacity, with additional 30,000 ft2 of capacity under construction
True Harvest
  • Arizona
  • One cultivation facility and one processing facility
  • 74,000 ft² cultivation facility currently under internal expansion to double capacity from 4 to 8 cultivation rooms, run by Shango growers
  • Expands Shango footprint in Arizona
  • Currently under expansion to double capacity
  • Accelerated consumer demand in new recreational market

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


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