acquisition Archives - Green Market Report

StaffStaffJuly 27, 2020
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3min2100

MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF) is buying Biome Grow Inc. (CSE:BIO) (CNSX:BIO.CN) for roughly $12,898,727 (all figures in Canadian dollars). Biome is a Canadian-based company with national and international business interests in the cannabis industry. Its wholly-owned subsidiary Highland Grow Inc. is licensed to cultivate, process, and sell cannabis.

The transaction will include $1.5 million in cash and 42,813,985 common shares in the capital of MYM at a price per share of $0.065 and 132,551,040 newly-created non-voting Class A Special Shares of MYM. Biome will become the largest shareholder of MYM.

“We are extremely excited to welcome Highland Grow to the MYM family”, said Robin Linden, interim CEO of MYM Nutraceuticals. “The Highland Grow cultivation and distribution facility in Nova Scotia will expand MYM’s cannabis footprint, enabling us to immediately supply the Canadian market with premium craft cannabis, including product grown in our Quebec based facility.” Michael Wiener will resign as a director of Biome and will be appointed as Chief Executive Officer and a director of MYM. Robin Linden will resume his role as a director and Chief Marketing Officer of MYM. Robert Wolf will also be appointed a director of MYM.

Financial Maneuvers

In order to pay for the acquisition, MYM has entered into a loan facility with 1909203 Ontario Inc. to borrow $3 million for a term of 18 months with an option to extend for an additional 6 months. 1909203 Ontario Inc. is controlled by Michael Wiener and parties related to him. The Loan Facility shall bear interest at a face rate of 17.5% per annum.

MYM has also agreed to loan Biome an amount equal to $1 million for a term of 18 months with an option to extend for an additional 6 months at the sole discretion of Biome upon Biome paying an extension fee. The Biome Loan shall bear interest at a face rate of 17.5% per annum.

“This is a great opportunity that benefits all of our stakeholders,” said Khurram Malik, CEO of Biome Grow. “This transaction allows Biome to become the largest single shareholder in a much bigger operating platform than it could currently create on its own, an ability to address our significant liabilities stemming from our previously abandoned capital intensive strategy, and it gives Biome greater flexibility on how to evolve the business in this fast-changing industry.”


Debra BorchardtDebra BorchardtJuly 22, 2020
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3min2550

Red White & Bloom Brands Inc. (RWB) (OTC: RWBYF) is buying a group of California-based companies operating under the name Platinum Vape for approximately $35 million. This is the first acquisition by RWB since going public and also marks its entry into California.

The company is paying $7 million in cash at the closing, another $13 million in cash within 120 days of closing, and a $15 million convertible note, only convertible after 12 months, payable on the third anniversary of closing. In addition to that, the selling security holders of Platinum Vape will be entitled to receive up to another $25 million on the first anniversary of closing, contingent on Platinum Vape achieving certain financial milestones.

George and Cody Sadler, Founders of Platinum Vape, said, “We at Platinum Vape are excited to have done such an amazing deal to integrate PV into the RWB family.  Cody and I have been building the business for nine years so far and feel that RWB is the best place to continue not only the growth of PV for us but for our family as well. We couldn’t be happier with our decision.”

Platinum Vape

Platinum Vape has a full product line of premium cannabis products sold at over 700 retailers throughout Michigan, California, and Oklahoma boasting an 84% rating (4.2/5) on WeedMaps.com.

Platinum was started 9 years ago by father and son duo, George and Cody Sadler. Based on the principles of quality, hard work, and customer service, they grew the business with no outside investors into one of the most successful and storied brands in the space today.

Brad Rogers, Chairman & CEO of RWB, said: “George and Cody, the founders and operators of Platinum Vape, are visionaries in the cannabis market and have done an incredible job in building the pre-eminent vape company in the United States through commitment to quality, education, and the communities they serve. One of the things that struck me is the balance they have achieved in running a profitable successful business, which will add tremendously to RWB’s top and bottom lines, while maintaining their commitment to supporting social issues, both financially and through awareness with the REACT program, they established.”


Debra BorchardtDebra BorchardtMarch 27, 2020
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4min11120

One day after announcing it had terminated its deal to acquire Verano Holdings, Harvest Health & Recreation Inc. (CSE: HARV, OTCQX: HRVSF) has now said it is going to buy Franklin Labs, LLC, a subsidiary of CannaPharmacy, for approximately $25.5 million payable with $15.5 million in cash and a $10 million promissory note.

Harvest Health stock fell over 16% to 94 cents yesterday on the news that the deal with Verano had been terminated. This was despite the broader markets trading much higher as shareholders were clearly not happy about the ending of the deal. Eight Capital looks to have cut its target price on the stock from C$14 to C$3. The Canadian stock was lately trading at C$1.32.

The Franklin Labs acquisition includes a 46,800 sq. ft. cultivation and manufacturing/processing facility in Reading, Pennsylvania. Pending necessary approvals, Harvest said it expects to expand the existing cultivation operation this year and potentially complete further expansion in the future to support market growth. Manufacturing and processing operations are projected to commence this year during the second quarter. The Franklin Labs facility is the only cultivation facility owned by Harvest in Pennsylvania and is expected to supply significant product to retail dispensaries across the state.

“This accretive acquisition helps to alleviate supply constraints in a fast-growing market while contributing to improved financial performance,” said Harvest CEO Steve White. “This investment in Pennsylvania is an important milestone in our plan to expand operations in key states and return to profitability.”

Harvest affiliated entities own and operate five retail dispensaries in Pennsylvania: two in Reading, and one each in HarrisburgJohnstown, and Scranton. Harvest affiliated entities are permitted for up to 15 total retail locations across the state.

Have A Heart Layoffs

Apparently Harvest Health did not “have a heart” when it came to the employees of the Have A Heart dispensaries. The company recently announced that it would be getting these dispensaries as part of its acquisition of ICG.  At the time White said, “We are excited to welcome the Have a Heart dispensaries into the Harvest family.”

Not too excited it seems.  Employees said that within days, Harvest laid off 85% of the Have a Heart‘s corporate office in Seattle or roughly 20 people in total. Employees were said to have been given 2 week’s severance pay. The employees did not see the layoffs coming as it seems they were assured their jobs were safe following the acquisition.

 


Debra BorchardtDebra BorchardtFebruary 3, 2020
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4min11020

Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB: GLDFF) signed a definitive agreement to acquire Oregon-based Tozmoz, which is a wholly-owned subsidiary, TZ Acquisition, Inc. for roughly $2.8 million. Tozmoz is a cannabis extractor that was founded in 2015 as one of the first Oregon Liquor Control Commission licensed processors in the state.

“We have been working with Tozmoz for years now and this acquisition fits squarely into our product-focused business strategy,” said Jeff Yapp, Golden Leaf Holdings’ CEO. “The core of this business is about the highest quality products on the market, like our Elysium Fields line of live resin cartridges and tinctures and our recently launched Chalice Farms RXO lines. This acquisition will allow us to take what we’ve been doing well, and continue to build and further expand our diverse portfolio of products. In our ‘crawl, walk, run’ model of business development, we believe Tozmoz is at the “run” stage.”

Terms

Golden Leaf bought all of the assets of Tozmoz, including the facility located in Clackamas, which serves as the headquarters for approximately $2.8 million. The deal consisted of cash and advances totaling $675,000, an earnout of up to $400,000 and GLH stock (29,166,667 shares at US$.06 per share). GLH has previously made certain payments to Tozmoz so that only approximately $227,000 of cash will be due at closing. The earnout of $400,000 may be paid to Tozmoz quarterly beginning in July 2020, based upon 30% of up to $1.2 million of third-party revenue generated from the assets acquired by GLH.

Last Friday, the company announced that its President Stanley (“Stan”) Grissinger would become the Interim CFO while it ontinues its search for a permanent CFO. Grissinger replaces the prior Interim CFO, Kate Koustareva.

The Tozmoz Business

Tozmoz offers multiple extraction processes including CO2, hydrocarbon and ethanol, and both short path and wiped film distillation. Additionally, Tozmoz provides product manufacturing and formulation, as well as packaging services, providing clients OLCC-approved products ready for wholesale distribution and retail sales. Tozmoz has generated revenue by toll-processing for clients including GLH. The gross margins on the GLH business will now be earned by GLH. Tozmoz will continue to do third-party white-label processing.

“Golden Leaf Holdings and Chalice Farms have become part of the fabric of the Oregon cannabis market, and we are excited to continue to innovate with them and provide the market with amazing new products,” said Mr. Klobas.

Golden Leaf Sues BMF Washington

Last week Golden Leaf said it filed a lawsuit against BMF Washington LLC and Peter Saladino in Multnomah County (Oregon) Circuit Court, seeking to recover $‎6,916,580 in damages. Golden Leaf is claiming breach of contract, arising out of the parties’ equipment leasing and intellectual property licensing agreements and is seeking damages of $676,580 and $2,080,000, respectively. There is also a claim for unjust enrichment related to their improper use of the Plaintiffs’ equipment and intellectual property. Golden Leaf is also claiming that both Defendants misappropriated trade secrets under Oregon and Washington law and is seeking additional damages of $4,160,000.


Debra BorchardtDebra BorchardtJanuary 17, 2020
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5min17270

Cannabis marketing tech firm Fyllo has acquired cannabis regulatory tech firm CannaRegs for an undisclosed amount. CannaRegs distinguished itself for the company’s ability to drill down into local cannabis regulations, which can differ between the municipality, county and state levels of oversite.

As part of the acquisition, Amanda Ostrowitz, CannaRegs’ founder and CEO, will join Fyllo as its Chief Strategy Officer to develop a global strategy focused on supporting existing and new customer relationships. She will be reporting to CEO Chad Bronstein. Fyllo said it will augment CannaRegs’ user interface and integrate CannaRegs data into its platform to enhance its compliance solutions for brands and publishers.

“The cannabis space is exploding and expected to grow to more than $50 billion annually over the next five years. Digital advertising is the industry’s clear pathway to growth, and brands need to have confidence that their ad creatives are not only reaching the right audiences but also meeting state-by-state and market-by-market compliance requirements,” said Chad Bronstein, founder, and CEO of Fyllo. “CannaRegs has become the go-to-market leader for supplying the cannabis industry with reliable compliance data. Combined with our technology, we are able to provide actionable information at scale. This acquisition helps us gain a significant competitive advantage to grow Fyllo, and by joining forces with the most seasoned and knowledgeable cannabis compliance experts, it will help generate more revenue opportunities for our clients.”

While the value of the deal wasn’t disclosed, it comes on the heels of Fyllo raising $18 million to accelerate the company’s growth and expand access to advertising-compliant solutions for the cannabis industry. Fyllo recently named Clive Sirkin, the former chief growth officer of Kellogg and former CMO of Kimberly-Clark, and Katie Ford, head of global brands at Twitter, to its board.

Fyllo said it has developed a full suite of cannabis advertising solutions for brands and online publishers powered by CannaBrain, an AI engine that ingests and interrogates billions of data points, allowing brands to safely build and execute advertising campaigns while also enabling publishers to create and monetize compliant ad inventory.

“The complex nature of cannabis regulations can be challenging for brands looking to confidently enter the fast-moving space. To stay ahead of the curve, companies need to have the wherewithal to know how to operate within state and local regulatory structures,” said Amanda Ostrowitz, founder and CEO of CannaRegs. “In a short period of time, Fyllo has emerged as an essential platform for publishers and cannabis companies to build creative campaigns in a safe and compliant way. By teaming up with Fyllo, we have the chance to build a truly remarkable brand that can disrupt the entire industry.”

Ostrowitz has made a name for herself over the past five years as she has built a team that has accomplished something many were unable to do and that track the myriad of cannabis regulatory changes. Drilling down to some of the smallest towns and tracking local meetings. Her company’s data is used by law firms, real estate professionals and cannabis companies as they try to stay compliant in a constantly changing landscape.

Fyllo said it will onboard over 150 CannaRegs customers, which will get the same benefits of state and local legal understanding in near real-time, along with an enhanced CannaRegs user interface. CannaRegs’ 30 employees will continue to operate out of its Denver offices.


Debra BorchardtDebra BorchardtJanuary 2, 2020
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3min7290

Harvest Health & Recreation Inc. (CSE: HARV)(OTCQX: HRVSF) is buying MJardin’s (OTC: MJARF) 32,000 square foot cultivation facility in Cheyenne, Nevada in a transaction valued at $35 million. Harvest Health said it was being financed by an existing Harvest lender. The company said that $30 million was funded on December 31st with the remaining $5 million to be paid when the deal is closed.

“We expect this opportunistic acquisition to support our expanding retail asset base in Nevada and afford higher margins and profitability through vertical integration with some of our pending acquisitions in the state,” said Harvest CEO Steve White. Harvest sees the deal as a way to help it reach profitability quicker. For MJardin, it had just begun making revenue on its Cheyenne property, while Colorado continues to be its biggest source of revenue.

“We are pleased with the return on our investment at Cheyenne. The proceeds from the Transaction significantly reduce our debt while strengthening our financial position towards funding our working capital requirements in 2020,” said Pat Witcher, President, and CEO of MJardin. “We are starting the new year on a stronger footing with a clear view of accomplishing our profitability targets based on all of our key assets coming online.”

In November, the company reported revenue of $7.6 million and a net loss of $3.6 million in the second quarter. At the time Witcher said, “We further reduced SG&A and have decreased those costs by 45% compared to Q2 2019. This allows us to focus on and effectively allocate resources to developing our product lines within Health Canada’s upcoming regulations around extraction, edibles, and topicals. We continue to invest in these business lines on both sides of the border. Responsible deployment of capital to maximize shareholder value remains our top priority as we grow our operational footprint with accelerated revenue growth.”

MJardin took on corporate cost-cutting measures late in the first quarter of 2019 and the company said the resulting expected annual SG&A and payroll expense run rate was expected to be approximately $12.1 million. On May 29, 2019, MJardin said it amended the terms of its existing loan with the senior lender to remove the callable feature and convert it into a term loan, this enabled MJardin to simplify the Company’s capital structure and fully focus on executing the operational plan.

 


Debra BorchardtDebra BorchardtNovember 4, 2019
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5min39563

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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8min26332

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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5min19560

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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3min15820

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.

 



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