Last month Scythian Biosciences agreed to sell its interests and assets in Argentina, Columbia, and Jamaica to Aphria Inc. in a deal valued at $193 million. Now the company is taking that money to enter the Florida Medical Marijuana market in a deal valued at C$136 million.
Scythian signed a letter of intent (LOI) to purchase CannCure Investments Inc, which is an Ontario-based company that is itself in the process of acquiring an interest in the Florida-based 3 Boys Farms, along with The Healthcare Organization. In addition, the deal includes a Florida agricultural company that has a license to operate as a Medical Marijuana Treatment Center in the state. The deal is expected to close on or about October 15, 2018.
3 Boys Farms is a Florida LLC that was founded in May 1981. It has the authorization to cultivate, process and dispense medical cannabis in accordance with Florida law and operation consists of 40,000 square feet of fully-operational greenhouses located on an eight-acre parcel of land. According to the statement, 3 Boys Farms has already secured and/or is finalizing leases for locations in prime retail and medical corridors in Fort Lauderdale, West Palm Beach, North Miami Beach, Dania/Hollywood, Fort Myers, Port St. Lucie, Stuart and St. Petersburg, with additional locations slated for Orlando, Tampa and Jacksonville.
“Our strategic acquisition will position us for more rapid expansion using 3 Boys Farms’ dispensary sites and fully-operational, award-winning, sustainable cultivation facilities,” said Scythian CEO Rob Reid. “With the exploding patient population and an estimated $2.5 billion in total annual market revenue in 2025, Florida is emerging as one of the largest and fastest growing medical cannabis markets in the US with one of the highest patients/license ratios in America.”
The press release noted that Florida has seen strong growth in its patient base since January 2018, with an estimated 52% increase in registered patients during that time period. With a total population of over 21 million (including the largest population over the age of 65 in North America), Florida is poised to be one of the most dynamic medical cannabis marketplaces in the United States. Additionally, Florida is considering legalizing recreational use of cannabis, a move that would result in estimated 2025 annual revenues of $5.5 billion.
The Healthcare Organization is a professional association that is revolutionizing the way medical care is being delivered. It is an all-in-one health service provider that covers diagnostic testing for nutritional guidance and is prepared to cover all of its patients’ medical needs with six state-wide clinics in Florida. As part of the Acquisition, the Healthcare Organization intends to roll out 12 additional centers state-wide over the next 24 months, including the acquisition of primary care practices/groups, which will substantially increase the group’s patient base state-wide.
The statement said that Scythian will initially purchase 70% of CannCure and have an option to acquire the remaining 30%, all at the same valuation. The first 70% will be acquired in exchange for $93,300,000 in equity and $43,200,000 in cash to be invested into CannCure by way of debt or equity. The equity shall be paid in common shares of Scythian, issued to the shareholders of CannCure, at a price, which is the greater of $4.00 or the 20-day volume weighted average price at closing. The maximum number of shares to be issued as a result of the acquisition of a 70% interest in CannCure is 23,325,000 common shares of Scythian. Scythian will also hold an option for 15 months from the date of closing to acquire the remaining 30% of CannCure. The option for the remaining 30% of CannCure (or $58,500,000) shall be payable in cash or shares, at the discretion of Scythian.
Scythian wasn’t done with selling the Caribbean and Latin America to go to Florida, it is also planning on listing on the Canadian Securities Exchange. It will delist its shares from the TSX Venture Exchange and not seek its approval of the acquisition. Scythian said that it expects the new CSE shares to be listed over the next ten business days and until then the stock will be halted and no longer trade.
In addition, to those moves, Scythian is also withdrawing its application to list its shares on the NASDAQ (NDAQ), but will keep its shares on the OTC market under the ticker SCCYF.