acquisition Archives - Green Market Report

Debra BorchardtDebra BorchardtNovember 4, 2019
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5min10482

Terra Tech Corp (OTCQX:TRTC) is merging with privately held OneQor Pharmaceutical, a company that is focused on developing, patenting, and delivering proprietary, plant-derived formulations in an all-stock transaction. The deal is expected to close by December of this year.

According to a statement, the combined company will focus principally on emerging pharmaceutical development opportunities for OneQor, while the operation of Terra Tech’s portfolio of THC and agricultural-related assets is expected to continue in the short-term. However, the new company expressed that it wanted to list on a national securities exchange and will consider several “strategic options for the legacy Terra Tech business segments that may include a spin-off, special dividend, merger or potential sale among other accretive transactions.”

“With our scientific research and proprietary compounds, combined with Terra Tech’s loyal shareholders, asset management, and corporate governance structure, we are confident OneQor will be able to positively impact the way society and big-box retailers approach OTC care. I have known the Terra Tech team for years and we believe that the alignment with Terra Tech will make this fundamental vision a reality,” said Matthew Morgan, Chief Executive Officer of OneQor.

“The cannabis industry is facing strong headwinds, from both a capital and a regulatory standpoint. We feel confident that this is the best use of the company’s balance sheet in order to achieve growth and profitable returns for shareholders,” said Derek Peterson, Chief Executive Officer of Terra Tech.

Terms Of The Deal

Terra Tech shareholders will own approximately 45% of the combined company and OneQor shareholders and certain holders of OneQor Simple Agreements for Future Equity will own approximately 55% of the combined company. In addition, in connection with the terms of certain other OneQor SAFEs, (Simple Agreements for Future Equity) convert into shares of Terra Tech common stock sixty-one days after the Merger and the issuance of such shares of Terra Tech Common Stock will affect both current Terra Tech shareholders and current OneQor investors.

In conjunction with the closing of the merger, Mr. Peterson and Mr. Nahass will each contribute back to the company’s all outstanding vested and non-vested stock options in an effort to reduce stockholder dilution. In addition, both individuals agreed to waive their $2 million change of control award which will save the company an additional $4 million in expenses. “As co-founders, it was important to Mike and me to make this merger work for all parties involved. This allows the combined company to move forward with a cleaner capital structure and without that significant expense overhang,” explained Derek Peterson, CEO of Terra Tech.

The combined company will be led by Mr. Morgan, a pioneer in the cannabis industry and versatile entrepreneur with significant experience in scaling organizations from start-up to late-stage, with Mr. Peterson staying on as Vice Chairman. Additionally, the company will be supported by a mix of current management and accounting executives. The company is expected to have operations in both Phoenix, Arizona, and Irvine, California. At closing, the combined company’s board of directors is expected to consist of eight members, including four members of Terra Tech’s current board and four members designated by OneQor.

TerraTech stock was lately trading at 26 cents down from a year high of $1.90. In September the company settled its lawsuits with members of the Vande Vrede family and entities controlled by them. As part of the settlement, the parties resolved their differences, and Terra Tech purchased all shares of common and preferred stock owned by the Vande Vrede family.


Debra BorchardtDebra BorchardtSeptember 16, 2019
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8min10210

Cresco Labs Inc.  (CSE: CL) (OTCQX: CRLBF) has announced a plan to acquire Tryke Companies including six prime Reef Dispensary locations in Nevada and Arizona, expanded licensed cultivation and process capacity in Las Vegas and Phoenix and entry into the Utah market.

The purchase price is $282.5 million which includes $30 million in real estate assets. The payment is a mix of Cresco Labs shares (approximately US$227.5 million), which will be subject to a nine to 21-month lock-up agreement following closing, and cash (approximately US$55 million). The deal is expected to close during the first half of 2020

According to the company statement, in 2018 Tryke generated 70.4 million in revenue and $24.6 million in EBITDA making it one of the highest-grossing and most profitable private cannabis companies in the U.S. market. Tryke has established six of the best-positioned retail locations in Nevada and Arizona, including the Reef Dispensary located adjacent to the Las Vegas Strip –  which has produced over $65 million in revenue since 2015 – and five additional operating locations in North Las VegasSparks, and Phoenix, AZ. The Tryke Company said that its North Las Vegas location boasts the highest known daily ticket count in the state of Nevada at 2,300.

“With significant in-state populations and tourist traffic, Nevada and Arizona were key near-term targets for expansion.  Creating the most strategic geographic footprint in the U.S. cannabis industry is not just about the number of states you operate in,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “Rather, our thesis for success in establishing a normalized and professionalized cannabis industry as well as providing the greatest ROIC for our shareholders calls for us to leverage our existing operations in states of significance to rapidly attain material and meaningful market-leading positions.”

Cresco is using the acquisition as a means to quickly expand in Nevada and Arizona. Nevada is one of the largest and fastest-growing cannabis markets in the U.S. with 2019 sales estimates of up to $940 million as per Marijuana Business Daily. Cresco Labs currently sells Mindy’s Edibles n Nevada, which has been one of the top three selling edibles in Nevada in 2019. Arizona is one of the largest and fastest-growing medical-only markets with an estimated 2019 sales of up to $760 million.

“The announcement today is the result of several months of deep interactions between our two groups and I know I speak on behalf of the entire team when I say we are very excited to be joining Cresco and to start realizing significant synergies for both of our organizations,” said Adam Ryan, CEO of Tryke Companies. “We have been consistently impressed by Cresco’s strategic approach to building long-term value in this growth market and its history of delivering what it promises – something that is often lacking in this industry. As the cannabis space has gained national and international attention over the past four years, we have been approached by several operators both private and public, regarding a transaction, but the vision and execution that Charlie, Joe and the team have demonstrated made them the only choice for Tryke.”

The deal will also add 17,000 pounds per year in a strategically-located cultivation capacity along with 1,320 lb. per year of processing capacity. It includes one of eight cultivation licenses recently awarded in Utah.

Reef Dispensary Details

  • The deal adds four (4) Reef Dispensary locations in Nevada in the cities of Las Vegas (2), Sparks and Sun Valley.
  • The deal adds two (2) Reef Dispensaries in Arizona in Phoenix and Phoenix Southeast Valley.
  • Tryke’s flagship Reef Dispensary in Las Vegas is the closest dispensary to the heart of the Las Vegas Strip. To management’s knowledge, on its current 4,800 square foot footprint, it is already one of the highest-grossing dispensaries in the world, with the current highest known grossing dispensary in the world, right across the street. There is no intersection in the world generating more regulated cannabis revenue annually than the intersection of Western Ave. and Desert Inn Rd. in Las Vegas.
  • The Reef Dispensary in North Las Vegas generated $14.5 million in revenue in the year-to-date period to August 31, 2019.

Unit Offering

In addition to the Tryke acquisition, Cresco Labs also announced that it has entered into an agreement with a group of investment dealers, led by Canaccord Genuity Corp. to purchase, on a underwritten basis an aggregate of 7,350,000 units of the company at a price of C$10.00 per Unit for aggregate gross proceeds of C$73,500,000.

 


Debra BorchardtDebra BorchardtJuly 9, 2019
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5min12300

Cannabis retailer Green Growth Brands Inc. (CSE: GGB)(OTCQB: GGBXF) is acquiring MXY Holdings LLC also known as Moxie in an all-stock deal valued at $310 million. The deal is expected to close within six months.

Moxie

Moxie is located in three states at this time, California, Nevada, and Pennsylvania. Michigan is set to be the fourth state. The products are in 250 dispensaries, which is a retail relationship that GGB would like to leverage.  Moxie provides customers with high-quality recreational and medical cannabis products.  Moxie offers live resin vape cartridges, CBD vape cartridges, liquid Moxie vape cartridges, and pre-rolled joints.

Green Growth said that the combination of Moxie and GGB would create one of the first cannabis companies to provide consumers a comprehensive product offering, including both CBD and tetrahydrocannabinol (THC) product lines and distribution that run from mainstream retail to cannabis dispensaries, all led by management with decades of expertise and credibility.

“In the short time since we began operations, we have built a business comprised of highly experienced management and merchant teams and cannabis experts, who have created successful CBD and MSO businesses. The coming together of Moxie and Green Growth Brands is anticipated to complete the circle,” said Peter Horvath, CEO of Green Growth Brands.  “As a ‘360 degree’ cannabis company, we expect to bring an expertise to each segment of the combined business: cannabis dispensaries, vertically-integrated and wholesale CBD and wholesale cannabis consumer products.”

Terms

A new Ontario limited partnership will be formed and GGB will be the general partner who will acquire the operating companies of GGB and the issued and outstanding units of Moxie, an arm’s length third party, in an all-equity interest transaction.  As part of the deal, GGB will also be directly acquiring shares of MXY C, INC. and MXY D, INC. Delaware entities within the Moxie structure, and interests in two entities, PurePenn LLC and Pure CA, LLC, with which Moxie has current acquisition agreements.

If Moxie terminates the deal, there is a $10 million fee. If GGB terminates the deal, there is a $17.5 million fee.

“The pairing between Moxie and Green Growth Brands is anticipated to accelerate growth for both businesses that results in a differentiated and expansive business model,” said Jordan Lams, Co-Founder and CEO of Moxie. “Moxie’s success comes from keeping our promise of delivering premium quality products to our consumers that creates an emotional connection with Moxie across multiple geographies. Both companies have proven track records of building customer loyalty through authenticity, and together, we are going to focus on taking steps to rapidly grow America’s mainstream cannabis brands.”

Green Growth’s Growth Plans

The Moxie acquisition is part of GGB’s focused growth strategy.  GGB is rapidly building its cannabidiol (CBD) business, including recently securing additional distribution through Designer Brands Inc., the parent company of DSW shoe stores (NYSE: DBI) and Abercrombie & Fitch Co. (NYSE: ANF), and is expanding its footprint of Seventh Sense Botanical Therapy shops from the current 61 to an expected 200+ by the end of calendar year 2019.  GGB is also building its MSO network, which now includes the potential for up to 47 dispensary licenses in three key states.

Moxie is recognized by its peers in cannabis, winning close to 100 industry awards over the years, including Brand of the Year at the 2018 California Cannabis Association Awards. Moxie’s newest product, the DART vaporizer, won first place at the recent 2019 High Times SoCal Cannabis Cup with its Piña Colada flavor. Jordan Lams was named 100 Most Influential People In Cannabis by High Times two years running,


Debra BorchardtDebra BorchardtJuly 5, 2019
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3min8880

Jushi Holdings Inc. (NEO: JUSH.B), signed a definitive agreement to acquire its first operational adult-use and medicinal dispensary in San Diego in a deal valued at $12 million. Jushi is getting 75% of the equity and voting interest in the dispensary. The deal is expected to close in the third or fourth quarter of this year.

“The California market is a core part of our growth strategy with a very sizable addressable market that, to put in perspective, is larger than Canada,” said Jushi CEO and Chairman, Jim Cacioppo. “San Diego, specifically, is a market that we have strategically chosen to establish our footprint in due to the limited nature of the licenses and restrictive zoning. Our partners in San Diego have built a fantastic store with a loyal customer base, which offers consumers a wide variety of high-quality products, is easily accessible off the highway and offers a well-located springboard for future delivery to San Diego and neighboring cities. We view this partnership as one of many sought by Jushi throughout California and, together with previously announced transactions, pending applications, and future expansion in the state, we look forward to continued announcements in due course.”

Terms

The company said in a statement that the $12 million will be paid 50% in cash and 50% by way of issuance of certain 8% secured notes to the sellers maturing after 18 months, and convertible at the option of the holders on or prior to the maturity date into Subordinate Voting Shares of the company, at a conversion price based on a specified historical volume weighted average trading price of the shares on the NEO exchange, subject to a minimum of $2.30 and a maximum of $2.875 per Share.

California has nearly 40 million residents and the longest-running medical cannabis program in the country. San Diego is the second largest city in California with a population of approximately 1.4 million and over 35 million visitors each year. San Diego is also a limited license market with a maximum of 36 total retail cannabis licenses divided among 9 council districts. To date, 19 retail cannabis licenses have been issued in the city, 17 of which are operational.

 


Debra BorchardtDebra BorchardtMay 16, 2019
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5min17550

SOL Global Investments Corp.  (CSE: SOL) (OTCQB: SOLCF) has entered into letters of intent to acquire California-based ECD, Inc., which operates as Northern Emeralds in a deal valued at $120 million. The purchase price will be satisfied by the issuance of common shares in CannCure Investments Inc. and the deal is expected to close on or before August 1.

Northern Emeralds is located in Humboldt County, California and is a cannabis cultivation, processing, and distribution company that has six licensed dispensary companies in the state that will operate under the nationally recognized “One Plant” brand. SOL Global said it intends to open One Plant-branded dispensaries throughout California (a total of 20 operating and licensed dispensary companies), Florida, and Michigan.

“Simply put, Northern Emeralds is the most advanced cannabis producer in the most famous cannabis-producing region in the world, and SOL Global is thrilled to integrate the Northern Emeralds family within our comprehensive U.S. cannabis strategy via the MSO,” said Brady Cobb, CEO of SOL Global. “This partnership enables SOL Global to deploy Northern Emeralds’ best in class genetics, method and data-based cultivation, and processing operations across our entire portfolio. This integration, combined with the carefully curated retail concept and dispensary locations offered by One Plant – as well as SOL Global’s roster of consumer-favorite brands – further cements SOL Global’s and ultimately the MSO’s position as a vertically-integrated multi-state powerhouse that is poised to drive substantial revenue growth in three of the most important cannabis markets in the United States.”

One Plant is a chain of nationally-recognized cannabis dispensaries with additional planned locations throughout CaliforniaFlorida, and Michigan.  One Plant dispensaries will also feature some of the best-known brands in the cannabis industry, including products from Northern Emeralds, Honey, Plus Brands, Venice Cookie Company, Old Pal, DomPen, Big Pete’s, Biscotti, and Cannabis Quencher, among many others. SOL Global said that One Plant intends to open nine dispensaries throughout California in 2019, and an additional eleven dispensaries in the state in 2020 and is currently in various development and approval stages for dispensary locations in Monterey CountyPalm SpringsContra CostaAtwaterGoleta, and Placerville, among others.

One Plant intends to open five dispensaries in Florida in 2019 and an additional eight dispensaries in Florida in 2020. The MSO, once it is fully established, intends to convert three existing Michigan dispensaries to One Plant-branded locations in 2019, intends to open an additional four dispensaries in Michigan in 2019, and intends to open an additional six locations in Michigan in 2020. In total, One Plant intends to have 46 dispensary locations in operation throughout the three states by the end of 2020.

“I am thrilled to join the Northern Emeralds team and brands with the SOL Global and One Plant families” said Cody Stross, founder and C.E.O. of Northern Emeralds. “We are passionate about ‘sharing with the world’ that which we started in a garage in Humboldt County over eight years ago. We cultivate the ‘highest intent of the seed’ and I can think of no better partnership to realize this dream.”


Debra BorchardtDebra BorchardtMay 16, 2019
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4min4650

The Supreme Cannabis Company, Inc. (TSX: FIRE) (OTCQX: SPRWF) is acquiring Canadian-based Blissco Cannabis Corp. (CSE: BLIS) (OTCQB: HSTRF) in an all-stock deal valued at C$48 million. Supreme would be buying all of Blissco’s stock

Blissco Cannabis is a Canadian wellness cannabis brand based in British Columbia and a multi-licensed processor, cultivator, and distributor of premium cannabis. Blissco owns and operates an 18,000 square foot, state-of-the-art extraction, processing, and cultivation facility located in Metro Vancouver, British Columbia. Blissco has supply agreements in British ColumbiaAlbertaSaskatchewan, and New Brunswick.

“Blissco has built a distinct and authentic premium wellness brand. Through our strategic partnership and prior investment in the company, we developed a deep understanding of the business and a high level of confidence in the senior management team. This transaction will allow Blissco to focus its business around the production and commercialization of cannabis oils and topicals for the premium wellness consumer,” said Navdeep Dhaliwal, CEO of Supreme Cannabis. “Blissco shares our vision, mission, and values. Through this transaction, we will combine best-in-class processes, commercialization, marketing and brand building expertise, and skilled management, ensuring we continue to achieve our vision to improve global well-being with cannabis.”

Deal Details

Each Blissco share will be exchanged for 0.24 of a common share of Supreme Cannabis.  Blissco’s CEO, Damian Kettlewell will remain at the company while benefiting from Supreme Cannabis’ expertise, infrastructure and access to capital. Mr. Kettlewell has committed to retaining at least 75% of his shares for a minimum of two years.

“Supreme Cannabis is the best positioned company in the cannabis space to help Blissco achieve its ambition of delivering innovative, quality assured full-spectrum cannabis products to the world,” said Damian Kettlewell, CEO of Blissco. “By merging with Supreme Cannabis, Blissco shareholders will benefit from the combined expertise of both companies in growing premium cannabis brands, producing and procuring high-quality inputs, commercializing new products, and ensuring regulatory compliance. Blissco shareholders will also benefit from Supreme Cannabis’ enhanced trading liquidity on the TSX and greater access to capital that will allow us to focus and accelerate Blissco’s premium wellness business.”

Supreme Cannabis’ portfolio includes 7ACRES, its wholly-owned subsidiary, and multi-award-winning brand; Cambium Plant Sciences, plant genetics, and cultivation IP company; Medigrow Lesotho, a cannabis oil producer located in southern Africa; and a brand partnership and licensing deal with Khalifa Kush Enterprises Canada.

 


Debra BorchardtDebra BorchardtMay 10, 2019
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4min7540

Acquired Sales Corp. (OTC Pink: AQSP) is acquiring Illinois-based CBD LION  for $2 million in cash, plus 5 million shares of Acquired Sales Corp.’s common stock. The deal is contingent upon CBD LION completing a capital raise of at least $4 million by Acquired Sales Corp.

Once the deal is completed, Acquired Sales Corp. plans to change its name to CBD LION CORP. to emphasize its vision to become the leader in the CBD products industry. Acquired Sales Corp. has already acquired 4.99% of rapidly growing CBD-infused beverage and products maker Ablis Holding Company and of craft distillers Bendistillery Inc. and Bend Spirits, Inc. located in Bend, Oregon.

“We set out to create a righteous brand whose products positively impact consumers’ lives. The demand for our products has been exponential: during our opening month of January 2018, our sales were just over $4,000; one year later, during the first four months of 2019, we are averaging about $160,000 in sales per month,” said Erik S. Lundgren, Founder and CEO of CBD LION. “We’ve had to relocate three times, each time to a larger facility, to try to keep up with growing demand. But, even though we moved to larger spaces, we were restricted by a lack of operating capital – we just couldn’t keep up with the demand! We are very excited about this transaction with Acquired Sales Corp. because it will provide us with the growth capital that we need to be able to meet our customers’ needs through expanding our product lines and distribution channels, which should dramatically increase our sales.”

Founded in 2017 CBD LION’s current list of products include CBD vape pens, cartridges, concentrates, tinctures, gummies, and lotions. The company said that all of CBD LION’s products are two-time third-party lab tested, something that most competitors do not do, which gives CBD LION a competitive advantage and products that consumers trust.

CBD LION has won the following awards: Best Edible at CBD EXPO WEST and Best Vape at CBD EXPO MIDWEST.

As part of the transaction, the key executives of CBD LION including Erik S. Lundgren, Katie M. Nauert (Lundgren), Andrew Stepniak, Christopher Nauert and Christopher Weiland will sign long-term employment agreements to serve in executive positions at Acquired Sales Corp.

William C. “Jake” Jacobs, CPA, President and CFO of Acquired Sales Corp., said, “CBD LION’s leadership team is knowledgeable, passionate, and laser-focused on promoting CBD LION’s high-quality array of products, which are made in a certified clean room and are tested extensively for quality. These factors, coupled with CBD LION’s awesome name, cool logo, great product reviews, its eye-catching colorful product packaging, and its incredible growth over the past two years, make CBD LION a fantastic partner for us. We are ready to ROAR!”


Debra BorchardtDebra BorchardtMay 1, 2019
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4min8710

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) is going to acquire Cura Partners, Inc. the owners of the Oregon-based Select brand, in an all-stock deal valued at C$1.27 billion or $948.8 million. The company said that the acquisition includes Select’s manufacturing, processing, distribution, marketing, and retailing operations and all adult-use cannabis products marketed under the Select brand name, including all intellectual property. The deal is expected to close in 2019. The stock moved higher by over 8% on the news to lately trade at $10.72.

Select ‘s THC products are sold in more than 900 retailers, it is the leading cannabis brand in key Western states, including California, Arizona, Oregon, and Nevada. The combination of the two companies will provide immediate geographic diversification with Curaleaf’s footprint on the East Coast and Select’s brand strength on the West Coast.

“The transformational acquisition of Cura and the Select brand is another step in our journey to create the most accessible cannabis brands in the U.S.,” said Joseph Lusardi, CEO of Curaleaf. “The combination of Curaleaf and Select is a perfect fit. In addition, we intend to create significant operational synergies from the integration of Select’s wholesale business with our vertically-integrated cultivating, processing and retail platform.”

The statement said that proposed transaction will combine Curaleaf’s retail locations, vertical integration, wellness brand and strong East Coast market presence with Select’s wholesale model, lifestyle brand and leading West Coast market presence. Curaleaf said that significant cost synergies are expected to be realized through operational efficiencies, greater economies of scale, supply chain efficiencies and increased vertical integration.

“I could not be more excited about this transaction with Curaleaf and what it means for the Select brand and for our industry. The leading companies in the industry on the West Coast and the East Coast are now joining forces to progress the legalization and mainstream acceptance of cannabis across the country,” added Cameron Forni, CEO of Cura and founder of Select. “Cura and the Select brand would not have the exceptional platform for growth that we have today without the incredible team that has built our foundation – from our production staff to our sales and marketing teams, and our executive leadership.”

Earnings

Last months Curaleaf reported its financial and operating results for the fourth quarter and full year ended December 31, 2018. The fourth quarter total revenue of $32 million increased 49% sequentially and 408% over the 2017 fourth quarter. Curaleaf delivered a net loss of $16.5 million, a steep drop from the previous quarter’s loss of $33 million, but the company reported a gain of $600k in the fourth quarter of 2017.

Cura Partners

In 2018, Cura was named as one of the “Top 100 Companies to Work For” in Oregon by Oregon Business Magazine and placed No. 12 in the Large Companies category. In 2019, Cura won the award again demonstrating Cura’s ability to focus on its culture while growing its headcount by 400%.


Debra BorchardtDebra BorchardtApril 18, 2019
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6min13370

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) is acquiring Acreage Holdings, Inc. (CSE: ACGR.U) (OTC: ACRGF) in a deal valued at $3.4 billion. However, the deal will not be consummated until cannabis is federally legal in the U.S. and assuming the shareholders approve as well as the  Supreme Court of British Columbia.

Once the shareholders and the Supreme Court approve, Acreage Holders will immediately receive a payment of US$300 million or approximately US$2.55 per Acreage Subordinate Voting Share. The company also said in a statement that holders of subordinate voting shares of Acreage will get 0.5818 of a common share of Canopy Growth stock for each Acreage Subordinate Voting Share held at the time of closing of the transaction.

“Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists,” said Bruce Linton, Chairman, and co-CEO, Canopy Growth. “By combining Acreage’s management team, licenses and assets with Canopy Growth’s intellectual property and brands, there will be tremendous value creation for both companies’ shareholders.”

Complex is an understatement. These companies are based in different countries with varying levels of shareholder ownership and voting rights. Add in the inclusion of Constellation Brands (STZ) and it becomes more complicated. Plus, there is the issue of legalization in the U.S., which it seems both companies are confident will happen sooner rather than later. Shareholder approval is expected to occur in June.

Jonathan Sherman and Jamie Litchen, partners at Cassels Brock who acted on the Acreage transaction for Canopy Growth said, “Canopy Growth’s acquisition of Acreage Holders is the most complex M&A transaction completed in decades. In this deal, one company has conditionally acquired another to be able to operate outside of a jurisdiction whereby the product or service would be considered legal. Canopy Growth’s listing on the TSX and NYSE and involvement of its largest shareholder created a regulatory environment to structure a deal of this magnitude successfully.”

“From the first day we created our company, providing exceptional customer care and delivering shareholder value have been our top priorities. This transaction will help accomplish both,” said Acreage Holdings Chairman, CEO and President Kevin Murphy. “When the right is exercised having access to Canopy Growth’s deep resources will enable us to innovate, develop and distribute quality cannabis brands across the U.S. and continue expanding our U.S. footprint. At the same time, a confluence of factors are making it much more difficult for a multi-state operator to achieve its full potential, including the enormous amount of cash required to scale. Our Board of Directors, management team and I are pleased to deliver significantly increased liquidity to our shareholders and put ourselves in an even stronger position to deliver continued and significant upside.”

Acreage Leadership

Acreage President, George Allen will depart the company effective immediately and Acreage Chairman and CEO Kevin Murphy will assume the duties of President.

The Acreage board has approved of the deal, but there wasn’t any information as to whether the well-known directors like former Speaker John Boehner, former Canadian Prime Minister Brian Mulroney and former Massachusetts Governor and current Presidential candidate Bill Weld will be on the new board. Acreage Holders will hold approximately 12.1% ownership in Canopy Growth (on a pro forma basis) and up to 16.6% if permitted acquisitions are completed prior to the Trigger Event.

The companies said in the statement that they will also execute a licensing agreement granting Acreage access to Canopy Growth’s award-winning line-up of brands such as Tweed and Tokyo Smoke, along with other intellectual property. Once the Right is exercised, Acreage will become part of a leading global cannabis company with access to markets beyond the U.S. Until then, the two companies will continue to operate independently.

Matt Karnes, Founder and Managing Partner of GreenWave Advisors said, “This deal positions Canopy Growth as a leader in the U.S. market while providing Acreage with near term liquidity and other strategic opportunities. It is not surprising that, within expectations of a coming end of U.S. prohibition,  a Canadian LP/U.S. MSO combination would occur. We further believe that the timing and structure of this deal could facilitate similar moves by other Canadian entities as well as further consolidations among U.S. MSOs that could possibly then look towards Canadian acquisitions. We hope that a transaction of this magnitude will help increase pressure on Congress to more swiftly address changes in federal law as the US is increasingly taking a back seat to Canada and other nations in the burgeoning global cannabis market.”

 

LLC


Debra BorchardtDebra BorchardtApril 1, 2019
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7min12060

Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF)  is acquiring CannaRoyalty Corp. also known as Origin House (CSE: OH) (OTCQX: ORHOF) in a deal valued at C$1.1 billion or C$12.68 per Origin House Share (based on the Exchange Ratio and the closing price of Cresco Labs Shares on March 29). The deal looks to be the largest public company acquisition in the history of the U.S. cannabis industry.

The combined company will be one of the largest vertically-integrated multi-state cannabis operators in the U. S.; a leading North American cannabis company, by footprint; and one of the largest cannabis brand distributors.

“The acquisition of Origin House is another example of our focused and disciplined approach to creating a meaningful presence in key cannabis markets through excellence in brand development and distribution,” said Cresco Labs CEO and Co-founder Charlie Bachtell. “It establishes Cresco Labs as the leading multi-state operator with one of the largest distribution platforms in California. Having a similar priority on consumers and consumer brands with the expertise of executives from the largest wine and liquor distribution company in the United States, the team at Origin House has established the premier cannabis distribution company in the largest cannabis market in the world. It’s an incredible platform for Cresco in California and the distribution infrastructure will provide a valuable framework to leverage as we scale our platforms in other states.”

Origin House

Origin House is a growing cannabis brands and distribution company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands. The company’s foundation is in California where it delivers over 130 branded cannabis products from 50+ brands to the majority of licensed dispensaries. Origin House’s brand development platform is operated out of five licensed facilities located across California and provides distribution, manufacturing, cultivation and marketing services for its brand partners. Origin House is actively developing infrastructure to support the proliferation of its brands internationally, initially through its acquisition of Canadian retailer 180 Smoke.

“From an Origin House perspective, this transaction is directly aligned with our strategy to build a leading portfolio of cannabis brands in California and to rapidly and accretively take those brands to the rest of the U.S. market, as well as the Canadian market,” said Marc Lustig, Chairman, and CEO of Origin House. “By partnering with one of the largest and most innovative U.S. multi-state operators in existence today, Origin House will supercharge its growth and be in a position to offer its brand partners access to 10 additional states, with licenses and supporting infrastructure already in place.  This Transaction is not the first opportunity we have reviewed, but it has received the unanimous support of our board and large shareholders because we are confident that together we will be in a position to truly change the face of the global cannabis industry while continuing to create significant value for the shareholders of both companies.”

Terms Of The Deal

Cresco Labs will acquire all of the issued and outstanding Origin House Shares, with each holder of Origin House common shares receiving 0.8428 Cresco Labs Shares for each Origin House Share (and each holder of an Origin House proportionate voting share receiving 84.28 Cresco Labs Shares for each proportionate voting share held), which implies a price per Origin House Share of C$12.68 (on an as-converted basis), representing a total consideration of approximately C$1.1 billion (on a fully-diluted).

Origin House shareholders will hold approximately 20% of the issued and outstanding Cresco Labs shares on a pro forma, fully-diluted and as converted basis, enabling Origin House shareholders the opportunity to participate in the expected value created through the deal. The company said there would be an immediate premium to Origin House shareholders of approximately 26% over the 30-day volume weighted average price.

Upon completion of the acquisition, as well as the receipt of licensure in Michigan and the closing of the company’s pending acquisition in Florida, Cresco Labs will have operations in 11 states, 23 facilities, more than 1.5 million square feet of cultivation, and licenses to operate up to 51 retail dispensaries. Cresco Labs brands will be sold in over 725 dispensaries across the United States.

“We are excited to welcome the Origin House team to the Cresco family,” said Cresco Labs President and Co-founder Joe Caltabiano. “With the addition of Origin House and its vast distribution network in California, we will have access to incredibly valuable real-time market data and insight into consumer buying patterns that will inform our product development strategies and reinforce our brand strength. In addition to their brand building and distribution expertise, Origin House has a very experienced M&A, corporate development and capital markets team that will be extremely valuable as we continue to expand and add scale through additional transactions. With respect to the capital markets impact, with the equity issued through this transaction, we expect to have substantially more shares in our float, which we believe will provide ample liquidity for larger institutional investors looking to deploy capital into the cannabis space. We expect that our larger scale and improved liquidity following this acquisition will positively impact our ability to attract a larger universe of potential investors and reduce our cost of capital in the future.”

 

 



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