Choom Archives - Green Market Report

Debra BorchardtFebruary 27, 2019
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It’s time for your Daily Hit of cannabis financial news for February 27, 2019.

On The Site

Curaleaf

Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) signed a definitive deal to buy California-based Eureka Investment Partners, LLC. Eureka operates a cultivation facility in the Salinas Valley and is developing three dispensaries across the state. The deal is valued at $30.5 million, of which $10 million is to be paid in cash, $20.5 million in Curaleaf stock, with a potential added bonus to be paid if certain goals are met. The deal is expected to close in March 2019.

Choom

Canadian-based Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF) also announced an acquisition on Wednesday. The company said that it had entered into a deal to buy Clarity Cannabis MD Holdings. The agreement includes 30 retail locations, three of which are licensed with the Alberta Gaming, Liquor & Cannabis Commission (AGLC). Choom will issue 8,867,000 Choom Shares and pay $2.5 million to the principal in connection with the acquisition.

MedMen

MedMen Enterprises Inc.  (CSE: MMEN) (OTCQX: MMNFF) reported its second quarter of fiscal 2019 with revenue of $29.9 million. This represents a 39.1% quarter-over-quarter increase over the first quarter of fiscal 2019 ending September 30, 2018.

California is the main driver of sales. MedMen’s eight retail locations primarily in Southern California reported a combined $23.7 million in revenue. Unfortunately, the company is continuing to post losses. MedMen delivered a total net loss of $64.6 million compared to a net loss of $66.5 million for the first quarter. So, the losses have been trimmed somewhat. The net loss per share in the second quarter was $0.25 versus a net loss of $0.27 for the first quarter.

In Other News

Canopy Rivers reported its third quarter results for the quarter ending December 31, 2018 with net income of C$1.4 million and a total loss of C$79 million. The diluted earnings per share was C$0.01. “With more than $55 million of capital deployed during the quarter, Canopy Rivers continues to position itself as a preeminent investment firm in the cannabis industry,” said Eddie Lucarelli, Chief Financial Officer of Canopy Rivers. In addition the company reported that it has closed its previously announced bought deal financing with a syndicate of underwriters. The Bought Deal consisted of an aggregate of 13,225,000 Subordinated Voting Shares, which reflects the exercise in full of the Underwriters’ over-allotment option, at a price of $4.80 per Subordinated Voting Share for gross proceeds of approximately $63.5 million.

Westleaf Inc. (TSX-V: WL) (OTCQB:WSLFF) has been approved to begin trading on the OTCQB effective immediately. Westleaf begins trading tomorrow under the symbol “WSLFF”.


Debra BorchardtFebruary 27, 2019
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Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) signed a definitive deal to buy California-based Eureka Investment Partners, LLC. Eureka operates a cultivation facility in the Salinas Valley and is developing three dispensaries across the state. The deal is valued at $30.5 million, of which $10 million is to be paid in cash, $20.5 million in Curaleaf stock, with a potential added bonus to be paid if certain goals are met. The deal is expected to close in March 2019.

By making this acquisition, Curaleaf will gain access to California’s wholesale market through an existing 110,000 sq. ft. greenhouse facility in Salinas, California, with the potential to expand up to 270,000 sq. ft. that could generate over 50,000 pounds of dry flower per year at full scale. The company said that during the fourth quarter of 2018, Eureka harvested over 2,500 pounds of flower and distributed pre-rolls and dry flower under the brand Monterey Kush.  Curaleaf is expected to launch its retail network in California in the second half of 2019. The planned launch of Eureka’s three premium locations will be in Long Beach, Salinas and Monterey County.

“The Eureka transaction represents a significant milestone for Curaleaf, enabling us to enter the highly attractive California market with a cultivation platform that we intend to use for state-wide product distribution,” said Joseph Lusardi, CEO of Curaleaf. “The planned launch of three dispensaries is a platform investment for Curaleaf’s retail expansion strategy to eventually cover the state, which is the largest market for cannabis consumption in the country.  With established vertically integrated operations, Curaleaf is ready to capitalize on the considerable market opportunity in California.”

Choom

Canadian-based Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF) also announced an acquisition on Wednesday. The company said that it had entered into a deal to buy Clarity Cannabis MD Holdings. The agreement includes 30 retail locations, three of which are licensed with the Alberta Gaming, Liquor & Cannabis Commission (AGLC). Choom will issue 8,867,000 Choom Shares and pay $2.5 million to the principal in connection with the acquisition.

“We are thrilled to welcome Clarity into the Choom brands portfolio through this acquisition,” states Chris Bogart, President & CEO of Choom. “Clarity has been successfully operating in Alberta since December and has submitted applications across the province. This transaction gives us a strong foothold in the Alberta retail landscape.  Moving forward we will be working diligently to maximize our retail footprint Canada wide, and this transaction helps us to achieve that goal.”

Choom said that Clarity has successfully progressed through AGLC licensing and is operating three stores in the legal adult use cannabis market in Alberta. They are High River, Cold Lake, and Red Deer. Clarity currently has 11 development permits awaiting construction, with 6 stores to commence construction, and 9 stores completed construction.

In November, Choom received a C$20 million investment from Aurora Cannabis (ACB). No doubt that investment helped fund this acquisition.


Debra BorchardtNovember 5, 2018
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Aurora Cannabis Inc.  (ACB) has made a $20 million investment in the emerging adult-use cannabis company Choom Holdings Inc. (OTCQB: CHOOF). The conversion price is approximately C$1.25 per share. Aurora has also secured the ability to purchase up to 40% of the company at a price of C$2.75 a share.

 The Choom brand is inspired by Hawaii’s “Choom Gang”—a group of buddies in Honolulu during the 1970’s who loved to smoke cannabis—or as the locals call it, “Choom”. The company strives to capture the spirit of the original Choom Gang for Canadians with the with the motto ‘Good Times with Good Friends’.

 

In addition to the investment in the company’s cannabis products, Choom is also developing a chain of retail stores with a “strong focus on elevated customer experiences.” In a company statement, Choom said it has the rights to open 45 retail stores across Western Canada, granted these stores are subject to local approvals. So far, 45 applications have been submitted, along with 27 development permits and 18 building permits received from various towns.

“Choom has developed a strong brand identity that radiates throughout its developing network of retail stores, which is well aligned with Aurora’s overall adult usage strategy,” said Terry Booth, CEO of Aurora. “Through this strategic investment, Aurora further diversifies its retail strategy, with additional retail opportunities across Western Canada, and future potential opportunities in the Ontario market.”

Chris Bogart, President & CEO of Choom, added, “This is a transformational investment from Aurora, one of the world’s leading cannabis companies, that helps accelerate our growth and expand our retail footprint to be one of best positioned and largest retailers in the country. Aurora’s continued confidence and investment allow Choom to provide high-quality cannabis to a broader market of consumers across the entire country and expedite our expansion and the rollout of store openings.”

Terms Of The Deal

The Offering is an unsecured convertible debenture maturing in four years, convertible into Common Shares: (i) at the option of Aurora, any time prior to the Maturity Date at a conversion price of $1.25 per Common Share, subject to a minimum conversion amount of $5,000,000, and (ii) at the option of Choom any time after the hold period has expired and the volume weighted average trading price of the Common Shares on the Canadian Securities Exchange  is $3.00 or more for a period of 10 consecutive trading days.

In connection with the Offering, Choom also issued to Aurora, for no additional consideration, 95,760,367 Common Share purchase warrants at an exercise price of $2.75, subject to adjustments in accordance with the terms thereof, to allow Aurora to increase its pro rata equity interest in Choom to approximately 40%. The Warrants are exercisable by Aurora at any time prior to 5:00 p.m. Vancouver time on November 02, 2020.

Aurora Cannabis Expansion Continues

Aurora recently listed its shares on the New York Stock Exchange joining Canopy Growth (CGC). This following a rapid-fire buying binge that now numbers 15 wholly owned subsidiary companies including MedReleaf, CanvasRX, Peloton Pharmaceutical, Aurora Deutschland, H2 Biopharma, Urban Cultivator, BC Northern Lights, Larssen Greenhouses, CanniMed Therapeutics, Anandia Labs, HotHouse Consulting, MED Colombia, Agropro, Borela, and the pending acquisition of South America company ICC.

The company also took some profits of its own with regards to its holdings in The Green Organic Dutchman (TGOD). Aurora owned over 39 million shares of TGOD. Between October 10 to October 16, 2018, Aurora sold roughly 5,783,200 shares for approximately $32,867,131 at a price of $5.68 per share, representing 2.2% of the issued and outstanding Shares of TGOD.


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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