High Tide Inc. (Nasdaq: HITI) is buying four operating retail cannabis stores in Ontario under the name Crossroads Cannabis, for C$2.5 million in an all-stock deal. In the latest quarter, Crossroads generated annualized revenue of C$7.6 Million and annualized Adjusted EBITDA of C$0.7 Million. The purchase price represents 3.5x annualized Adjusted EBITDA for the three months ended December 31, 2021.
“Since its inception, Crossroads has been a very popular cannabis retail brand in the communities that it serves. The Stratford Crossroads location was the first to open in the city and has meaningful levels of goodwill from early customers in the community,” said Raj Grover, President and Chief Executive Officer of High Tide. “As consolidation in the Canadian retail cannabis space has picked up steam, we have become the acquirer of choice. This has allowed us to be strategic in determining where to expand within Ontario, bringing our innovative discount club model to communities which we have not yet been able to serve directly.”
The Stores are located in Stratford, Woodstock, Hanover and Markdale. The Stratford store is located in a retail plaza anchored by a national discount grocery chain. The Woodstock store is located in a shopping center anchored by a large national home improvement store. The Hanover store is located in a power center with numerous anchors including national grocery and big box retail chains. The Markdale store is well-located immediately beside the provincial liquor retailer.
Grover added, “The pandemic has resulted in longer lead times to open stores organically, and by consolidating the retail landscape through accretive acquisitions, we are keeping up the momentum of overall store expansion. We expect to announce more retail store acquisitions in the near term as we move towards our goal of reaching 150 stores by the end of calendar 2022.”
“As I observed how the retail market has matured in Ontario, it became crystal clear to me that consolidation would be the path to true longevity. I recognized the exceptional foresight and leadership in Raj and his committed team, and I’m delighted to now be associated with High Tide and Canna Cabana’s future growth and success,” said Robert Rowe, Sole Proprietor of Crossroads.
High Tide is the largest Canadian retailer of recreational cannabis as measured by revenue, with 111 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. The company is also North America’s first and only cannabis discount club retailer, featuring Canna Cabana, Meta Cannabis Co., and Meta Cannabis Supply Co. banners, with additional locations under development across the country.
High Tide’s portfolio also includes retail kiosk and smart locker Fastendr technology. High Tide has been serving consumers for over a decade through its established e-commerce platforms including Grasscity.com, Smokecartel.com, Dailyhighclub.com, and Dankstop.com and more recently in the hemp-derived CBD space through Nuleafnaturals.com, FABCBD.com, and BlessedCBD.co.uk, as well as its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz.