AltMed Archives - Green Market Report

Debra BorchardtNovember 12, 2020
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9min16340

Verano Holdings, LLC is buying and merging with Alternative Medical Enterprises, LLC, Plants of Ruskin, LLC,  called AltMed to create the largest privately-owned cannabis company. The value of the transaction was not disclosed.

Verano is a multi-state operator located in 12 states, with 17 active retail locations and approximately 440,000 square feet across its cultivation facilities, The company is known for its portfolio of consumer brands: Encore, Avexia, and Verano. Verano designs, builds and operates inimitable Zen Leaf branded dispensaries.

AltMed is known for its MÜV brand of medical cannabis-infused products launched in Arizona in 2016. MÜV Dispensaries by AltMed Florida was formed a year later through the partnership of AltMed Enterprises and Plants of Ruskin, a multi-generational Florida agricultural leader. The company has 27 locations (one in Arizona muv-az.com, 26 in Florida muvfl.com, and more added each month).

“The combination of Verano and AltMed is a game-changer in the U.S. cannabis industry. It is expected to create one of the largest private cannabis companies with truly no redundancies in geography or operations. AltMed is an ideal partner to accelerate our shared vision to be one of the most innovative and profitable cannabis operators in the country. Our cultures are seamlessly aligned and we have a strong commitment to providing a superior, customer-focused cannabis experience across our existing markets. AltMed not only has a substantial market presence in Florida and Arizona, a state which recently approved recreational use, but also delivers a portfolio of high-quality, pharmaceutical-grade medical cannabis products,” said George Archos, Founder and CEO of Verano Holdings. “Together, we believe we have a very strong management team whose experience spans cannabis, pharma, real estate and hospitality, and we are very excited to welcome and work collectively with AltMed’s Michael Smullen, Bill Petron and John Tipton.”

The combined company will be led by the founder and CEO of Verano, George Archos, a veteran in the logistics and operations spaces who entered the cannabis industry in 2014. AltMed’s key personnel will maintain a strong presence on the management team and Board of Directors, including Michael Smullen, Alternative Medical Enterprises, LLC’s Chairman, CEO & Co-Founder, and John Tipton, a registered CPA with more than 30 years of leadership experience in both the agricultural and land development industries. In addition, Bill Petron of AltMed Arizona will bring his vast experience to the newly formed company.

Mr. Archos continued, “This combination will create significant opportunity to expand our business into limited-license markets and scale both our wholesale and retail operations. We have created a thoughtful model for long-term success and a solid platform to deliver what we expect to be industry-leading EBITDA margin on a pro forma basis. In addition, our combined strong balance sheet should provide us with financial flexibility to expand operations and go deeper in states in which we operate.”

Harvest Went Bust

Earlier this year Verano looked like it was going to be acquired by Harvest Health (OTC:HRVSF) in an all-stock deal valued at approximately $850 million based on a share price of C$8.79 ($6.70). The companies stated at the time of termination that prolonged obstacles in meeting requirements for state and local regulatory authorities needed to transfer ownership and operational licenses, adverse capital market conditions, a challenging environment for asset sales, all contributed significantly to the decision not to move forward with the pending acquisition. Harvest Health shares are now trading at C$2.41 ($1.84).

Profitable and Formidable

Verano says it has been profitable since it was founded.  AltMed was founded in 2014 and said it has been profitable in recent years. AltMed has 220,000 square feet of cultivation facilities in Florida, and 30,000 square feet in Arizona, which is rapidly expanding by an additional 50,000 square feet to meet increased demand.

The combination will accelerate Verano’s expansion into Florida and Arizona, currently among the largest and fastest-growing cannabis markets in the United States. Following the consummation of the transaction, the combined group of companies will operate under the Verano name and will have the ability to operate in 14 states, with eight cultivation facilities and 44 active retail locations. Approximately 32 additional retail locations are planned.

“We share Verano’s enthusiasm for this transformative business combination. We have a mutual commitment to delivering a high-quality product through a superior customer experience to distinguish us in the marketplace,” said Michael Smullen, Chairman, CEO and Co-founder of AltMed’s Alternative Medical Enterprises, LLC. “We are both disciplined stewards of capital, run our businesses efficiently and are focused on delivering profitable growth. It was important for us to find the right strategic partner and Verano was the ideal choice.”

“Through our combination with Verano, we will have economies of scale to further expand our operations, bring adult-use programs online and scale cultivation and manufacturing capacity to meet market demand,” said John Tipton, CEO of AltMed Florida. “Both Verano and AltMed are uncompromisingly dedicated to superb cultivation and manufacturing processes, new product development and retail design and engagement. In combining with a multi-state operator, we have a larger platform to meet the growing needs of our customers and deliver long-term profitable growth for our stakeholders.”

Synergies

The company said in a statement that the combination was expected to result in substantial benefits to AltMed and Verano, including the following reasons for the transaction.

  • Establishes Verano as one of the three largest MSOs in the United States based on 2021 internal projections compared to current FactSet 2021 consensus estimates for revenue and EBITDA.
  • Creates a scale market leader well-positioned for growth and accelerates expansion in the limited license, high-growth markets – specifically Florida and Arizona.
  • Increases Verano’s reputation as a manufacturer of high-quality products on a large scale by adding similar capabilities in new states.
  • Increases the combined company’s financial profile with industry-leading margins and profitability.

Debra BorchardtApril 10, 2020
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5min22070

Mushroom company Champignon Brands Inc. (OTC:SHRMF) has entered into a definitive agreement to acquire Canadian ketamine clinic operator AltMed Capital Corp. Champignon said that AltMed has a suite of assets that will hasten Champignon’s anticipated rollout of new clinics to be opened across the United States and Canada. Five new clinics in key markets, including New York, Florida and California, are anticipated to be fully operational by Q4 2020.

Deal Terms

Champignon will buy all the shares of AltMed for a total consideration of 55,124,000 common shares, common shares that are currently selling at roughly $0.59 placing a value on the deal of approximately $32 million. 16,522,000 shares will be subject only to applicable hold periods under securities legislation and 38,602,000 will be subject to voluntary resale restrictions and released in five equal tranches every three months with the first release commencing thirty days following closing.

AltMed Clinics

AltMed owns 75% of the CRTCE, a fully operational ketamine clinic located in Mississauga, Ontario, with over 18 months of operating history. The CRTCE was licensed in 2018 by the College of Physicians and Surgeons Ontario under OHPP (Out of Hospital Premise Program) to administer ketamine treatments for indications including but not limited to depression, bipolar disorder, post-traumatic stress disorder (PTSD) and obsessive-compulsive disorder (OCD).

The clinic has been licensed by Health Canada to dose eligible patients with psilocybin and is the only clinic in Canada to perform psilocybin doses under Health Canada approval. AltMed’s chief executive officer, Dr. Roger McIntyre, is a professor of psychiatry and pharmacology at the University of Toronto and head of the Mood Disorders Psychopharmacology Unit at the University Health Network, Toronto, Canada.

“Founded and operated by Dr. McIntyre, the CRTCE has the human capital and unmatched R&D capabilities, with respect to rapid onset treatments such as ketamine, to revolutionize the treatment of depression, PTSD and substance use disorders,” said Gareth Birdsall, CEO of Champignon. “Champignon and AltMed will leverage Dr. McIntyre’s expertise, alongside the CRTCE’s existing SOPs, data-driven research sets and practitioner education modules, to roll out five unique ketamine clinics across Florida, California and the U.S. Eastern Seaboard. Our additional ketamine clinics are projected to be fully operational by Q4 2020. Furthermore, having previously completed funding rounds, our acquisition of AltMed will further bolster our corporate treasury.”

Study Trials

With this acquisition, Champignon will now have three trials in the Phase I stage and three trials in the preclinical stage during 2020. The company will also have seven IP patents for its ketamine/psilocybin delivery platforms and formulations.

In the second half of 2020, AltMed said it will start both comprehensive R&D campaigns as well as clinical trials, to be led and administered by leading M.D.s, clinicians, and researchers targeting the following indications:

  • Treatment-Resistant Depression (Dr. Roger McIntyre)
  • Addiction (Dr. Peggi Shepherd DeGroote)
  • PTSD/Traumatic Brain Injury (Dr. David Greenberg and Dr. Michel Rathbone)
  • Aging/Dementia (Dr. DW Molloy)
  • Anxiety/Obsessive-Compulsive Disorder (Dr. Michael Van Amerigan)

Pat McCutcheon, director of AltMed, said in a statement: “Together with Champignon’s existing novel ketamine delivery platforms, associated patents/IP and now advanced clinical infrastructure, we will look to deliver approved, point-of-care psychedelic treatments in clinics throughout Canada and the United States. Ketamine, psilocybin and MDMA have all been fast-tracked by the FDA and Health Canada with respect to R&D in DPS, and we will look to monetize our capabilities and human capital within this domain. Led by our accomplished operational team, comprised of experienced clinicians, academics and thought leaders within dynamic, blue-sky industries, we will be the global leader with regard to the application of rapid onset treatments and will continue to be a first-in-class, vertically integrated center that champions R&D, clinical research, knowledge translation, vocational rehabilitation, and psychotherapeutics, offering patient populations a wholesome and comprehensive treatment ecosystem.”


Debra BorchardtAugust 27, 2018
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4min15650

CannaRoyalty Corp.  (CNNRF) entered into a binding letter of intent with Tidal Royalty Corp. (TDRYF) to acquire the company’s equity stake and royalty entitlement in Alternative Medical Enterprises LLC or AltMed for C$8 million. CannaRoyalty will continue to have the right to license MÜV products in CaliforniaNevadaCanada and other select markets. CannaRoyalty said that the sale of AltMed represents a roughly 168% return on investment for its shareholders.

“The sale of our equity stake and royalty in AltMed advances our stated strategy of realizing value for shareholders on assets that are deemed non-core to our business,” said Marc Lustig, Chairman, and CEO of CannaRoyalty. “The substantial gains from our successful investment in AltMed will provide CannaRoyalty with capital to continue to expand its distribution and brand network in the California market while offering CannaRoyalty shareholders a significant return on investment.”

AltMed is a Florida-based licensed cannabis business operating in the state of Florida that exclusively manufactures and distributes a line of cannabis-infused products marketed under the MÜV™ brand. NuTrae, the company that actually makes the MüV products is a subsidiary of AltMed and launched the MüV product line in 2016 in Arizona.

Tidal Royalty is a Toronto-based company that aims to provide royalty financing to the U.S. regulated cannabis industry. The company will provide operators with the funding they need to grow their business. Tidal says that its operators will benefit from non‐dilutive capital while investors get top‐line access to a diversified portfolio of companies.  The company has raised approximately $40MM to date by way of private placements, which it intends to use primarily for royalty financings. The company’s board includes Hugo Alves (President of Auxly
Cannabis Group (XLY) and Lustig.

CannaRoyalty currently holds a 6.14% ownership position in AltMed and has a 3.5% royalty on global net sales of the following MüV products: Transdermal patches, metered dose inhalers, and patent-pending transdermal gels.

Lustig went on to say, “We were early to identify the long-term potential in AltMed and MüV as vital players in the North American cannabis value chain and are confident that the businesses will be valuable additions to Tidal Royalty’s diverse portfolio. As CannaRoyalty continues to grow and build a solid presence in California, we look forward to partnering with the experienced team at Tidal Royalty.”

Stock Performance

CannaRoyalty was lately trading at $3.92 on the OTC Markets. This is lower than it’s 52-week high of $4.58, but way above its year low of $1.51. The company recently reported record financial results for its second quarter with revenues of $3.5 million.

 


StaffApril 26, 2018
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3min20280

Canadian-based CannaRoyalty Corp. (CNNRF) announced that one of its investee companies, Alternative Medical Enterprises, LLC often called AltMed closed a private placement financing of $35.4 million. In a company statement, CannaRoyalty said it made a $1.5 million equity investment in AltMed in 2015 and that the post-money valuation of this current financing represents a growth in value of approximately 215% for CannaRoyalty shareholders.

AltMed Chairman and CEO Mike Smullen added, “The financing will enable us to build out our 25 licensed dispensaries in Florida, expand our cultivation capabilities and increase our footprint in Arizona. We anticipate significant growth over the next few years as we expand our licensed facilities to meet the needs of medical patients in Florida and Arizona. We are grateful to CannaRoyalty and CR Advisory for their expertise and assistance in getting our company to this stage.”

AltMed is a pharmaceutical company based in Sarasota, Florida and currently has vertically integrated cannabis operations in Arizona and Florida with a pipeline of expansion opportunities to scale operations significantly in the US medical cannabis market and expand into the international market. Additionally, the company owns MÜV,  a brand of cannabis-infused products that was launched in Arizona in 2016.

MUV has a full range of premium smoke-free cannabis products including topicals, inhalers, vaping products, shatter and crumble as well as oral sprays and tinctures. CannaRoyalty has a 3.5% royalty on global net sales of the following MÜV products; transdermal patches, metered dose inhalers, and patent-pending transdermal gels. The company also has the right to license MÜV products in California and Canada.

“Congratulations to Mike Smullen, Matt Duffy and the entire team at AltMed for the tremendous growth they have generated this year, as well as the international recognition that their MÜV product line has received,” said Marc Lustig, CEO of CannaRoyalty. “Our investment alongside the AltMed team has driven tremendous value for our shareholders and is representative of the unique investment opportunities CannaRoyalty has been able to participate in as one of the first movers in the U.S. cannabis industry. We expect to realize further value from our rights to the MÜV product suite, particularly as we build our presence in Canada and other jurisdictions.”


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