GrowForce Archives - Green Market Report

MJardin Group signed a letter of intent to acquire Toronto-based cannabis company GrowForce Holdings Inc. MJardin will own 100% of the outstanding shares of GrowForce in an all-stock deal valued at approximately C$275 million. In addition to that, MJardin began trading on the Canadian Securities Exchange using the symbol MJAR.

MJardin projects that it will bring in $162 million in revenue in 2019 according to an investor presentation. The 2020 estimates are for $325 million in revenue.

“With more than ten years of professional cannabis cultivation, processing, distribution and retail, MJardin is among the world’s most experienced cannabis companies, with a proven track record of operational excellence,” said Rishi Gautam, Chairman & Chief Executive Officer of MJardin. “Listing on the Canadian Securities Exchange is a significant milestone in our evolution and a testament to our team’s dedication and focus on building a preeminent global cannabis management platform.”

Grow Force Acquisition

Once the acquisition is completed, the new MJardin Group will have 49 facilities operating or under development across North America, cultivating approximately 87,000 kg of finished product per annum and managing 23 cultivation facilities, two outdoor grows, five extraction facilities and 19 retail dispensaries across four U.S. states and four Canadian provinces.

GrowForce shareholders will receive 0.375 MJardin common shares for each GrowForce common share held. Based on MJardin’s common share price of $12.00 per share pursuant to the Company’s October subscription receipt financing, the implied consideration to GrowForce shareholders is $4.50 per share. The combined company is anticipated to have a pro forma cash balance of approximately C$65M.

“The combination of MJardin and GrowForce provides the foundation to create a preeminent global cannabis management platform with what we believe is unparalleled experience in cannabis cultivation, processing, distribution, and retail,” said Gautam. “We are excited to bring both companies together under one comprehensive platform as we enter the public markets, further invest in our business and execute on our growth strategy.”

Looking Ahead

In the U.S., MJardin said it would continue expansion by entering key-markets via acquisitions and organic growth and increase its existing footprint by developing vertically integrated networks owning the “Seed to the Shelf.” The company plans on focusing on Florida, California, Massachusetts, New York, and Arizona. In the Canadian market, MJardin plans on taking over existing Canadian Licensed Producers and retail assets.

Internationally, MJardin will focus on Spain, Italy, Germany, and Switzerland. The company is currently, forging partnerships with local players as the regulatory framework requires a country-specific strategy and approach. The company also plans on establishing contacts with Universities and pharma players to develop R&D initiatives to address the nascent European medical market.

The company will look to Latin America and Africa as focus regions to build low-cost cultivation facilities. It is currently in talks for expansion initiatives in Colombia and Uganda.

Earlier this year, MJardin Group, North America’s largest operator of turnkey cannabis facilities, announced the creation of a new company, GrowForce Holdings Inc (“GrowForce”).

GrowForce has a mission to become one of the premium licensed producers (LPs) in Canada, and other federally legal markets worldwide. Shares were offered to all of the securities holders of MJardin after GrowForce completed a private placement financing of its shares.

Within GrowForce’s portfolio in Manitoba and Ontario includes a 120,000 square foot flagship production facility, and it plans to acquire more facilities across Canada. GrowForce is currently headquartered in Toronto.

One important flagship of GrowForce’s work is the opportunities that will be provided to Canada’s First Nations in terms of job creation and retail market development. GrowForce announced that Bridging Finance Inc, an established leader in private debt infrastructure financing to First Nations, has agreed to provide significant project financing for various opportunities that engage the First Nations communities.

“We are pleased to continue our strategic partnerships with MJardin and now GrowForce in Canada, which includes a deeper focus on our collective First Nations strategy of which we are extremely proud to actively support,” said David Sharpe, CEO of Bridging Finance and a member of Tyendinaga First Nation.

As the royal assent approval of Bill C-45 in Canada neared earlier this June, there were significant concerns raised by Canada’s First Nations about the lack of consultation for First Nations in the legal Canadian cannabis space. This partnership moves the country closer to ensuring that First Nations are equally represented in Canada’s implementation of Bill C-45, set for October 17. 

Bridging Finance and MJardin have established the Bridging Infrastructure Fund that has a particular focus on private debt financing for infrastructure and consolidation of entities within the cannabis sector. The project has committed over $75 million thus far, with over $60 million of projects in the pipeline.

“We are excited to launch GrowForce into the Canadian market as a fully-financed and proven operator of cannabis assets with a deep bench of strategic and operational talent,” said Rishi Gautam, GrowForce Chair and CEO.

MJardin is planning a reverse take-over of Sumtra Diversified Inc. and expects to list on the Canadian Securities Exchange (CSE) in a few weeks.

Canadian-based cannabis platform GrowForce Holdings Inc. closed its previously announced equity
capital raise giving the company more than C$38 million in gross proceeds. GrowForce plans to use the funding for cultivation expansion and strategic acquisitions of high-quality assets, and general working capital.

The offering was completed in connection with GrowForce’s previously announced proposed
reverse take-over (RTO) of Platform Eight Capital Corp. That deal is expected to be completed during the third quarter of 2018.

“With this capital raise, additional access to growth capital and key strategic partnerships in place,
GrowForce is well-positioned to consolidate a fragmented cannabis industry in Canada and
international markets,” said James Lowe, EVP of Operations for GrowForce. “Our growth strategy is
focused on leveraging our significant experience successfully operating cultivation facilities across North America for more than nine years to position GrowForce as the leading consolidation platform in the legal cannabis industry.”

GrowForce was created and spun-off by Denver, Colorado-based cannabis management company MJardin. According to the company statement, GrowForce said that it has entered into an exclusive cultivation, extraction and retail licensing agreement with MJardin, including exclusive rights to its cannabis management services and intellectual property portfolio in Canada and international markets.

Terms 

The statement said that GrowForce issued 7,832,716 brokered subscription receipts exchangeable
for common shares at a price of C$3.20 amounting to C$25,064,700. GrowForce also issued 4,115,521
non-brokered subscription receipts at the same price for gross proceeds of approximately C$13,169,700. The result is a cumulative raise of more than C$38 million. Cormark Securities Inc. and Canaccord Genuity Corp., acted as co-lead agent, together with a syndicate of agents, including Haywood Securities Inc., KES 7 Capital Inc., nd Mackie Research Capital Corporation, for the offering.

GrowForce Footprint

GrowForce possesses an existing Canadian footprint of cannabis assets with a planned cumulative capacity of approximately 60,000 kg of cannabis production per annum. GrowForce also plans to establish partnerships with various First Nations to build new facilities for large-scale cannabis cultivation, extraction, and retail. These partnerships will allow Indigenous Peoples of Canada to capitalize on economic opportunities in the cannabis space through the cultivation, distribution and retail sale of cannabis products.

“There are currently more than 100 licensed producers across Canada, with the majority moving from the construction of facilities to operations. Few of these licensed producers have the operating expertise to successfully execute this transition,” said Lowe. “GrowForce has significant access to capital with the operational expertise to be one of the top licensed producers as we execute our M&A consolidation strategy and unique retail distribution model.”