Scythian Biosciences Archives - Green Market Report

Debra BorchardtOctober 23, 2018
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Ontario-based Scythian Biosciences (OTC: SCCYF) is selling its Florida operation called 3 Boys Farms and using that money to become a multi-state operator.

In July, Scythian sold its Caribbean assets to Aphria (OTC: APHQF)  in a deal valued at $193 million. Scythian spent $136 million to purchase CannCure Investments Inc, which is an Ontario-based company that is itself in the process of acquiring an interest in the Florida-based 3 Boys Farms, along with The Healthcare Organization. That deal was supposed to close on October 15.

Scythian is selling its 100% interest in 3 Boys Farms, which is a strictly Florida operation to Verano in exchange for $100 million of Class B units in Verano. In exchange, Scythian will receive a substantial stake in Verano which will open the company up to key markets, including Illinois, Maryland, Michigan, Nevada, Ohio, Florida, and Puerto Rico, with additional states to be added in 2019. All part of the company’s expansion strategy. Only four states are operational at this time.

“Scythian delivers on its promise to investors by identifying and investing in the most impressive emerging cannabis company in the U.S. marketplace, Verano,” said Scythian Chief Executive Officer Brady Cobb. “Verano brings strong, efficient and expansive operations to numerous U.S. markets. Its customer-centric dispensary experience that is filled with its diverse and high-quality products (150 SKU’s), cutting-edge cultivation facilities, innovative processing techniques, and seasoned executive/management team will fast-track its standing to the top of the U.S. cannabis industry.”

Deal Details

Scythian is investing $88 million in Class B units of Verano as part of a larger brokered private placement of securities of Verano to accredited investors for an aggregate amount of $100 million. Clarus Securities Inc. acted as the sole agent in the financing. The deal is expected to close on or about October 26, 2018. According to the company statement, Scythian also entered into a membership interest contribution agreement between Scythian and Verano, under which Scythian will acquire the remaining 40% of 3 Boys Farms and, when completed, sell and convey its entire interest in 3 Boys Farms to Verano in exchange for $100 million of Verano class B membership units.

Verano

Verano Holdings is a national, vertically integrated operator of licensed cannabis cultivation, manufacturing, and retail facilities. Verano develops and produces a suite of limited edition, fashion-forward cannabis products, which offer medicinal therapies and inspirational product options. It designs, builds and operates the Zen Leaf™ branded dispensary.

Facilities include:

  • Illinois: one cultivation and production facility and three dispensaries;
  • Florida: one cultivation and production facility and up to 30 dispensary facilities under current law;
  • Maryland: one cultivation and production facility and two dispensaries;
  • Nevada: one cultivation and production facility and one dispensary;
  • Michigan: licenses under development;  
  • Ohio: licenses under development;
  • Puerto Rico: licenses under development

“This transformative investment will fast-track our long-term goal to dominate the most important growth industry in the United States,” stated George Archos, Verano’s Chairman, and CEO. “Even with our accelerated growth, we will remain focused on our core values of operational excellence with an unwavering commitment to producing safe, quality cannabis products for a consistent experience.”

 

 


Debra BorchardtJuly 30, 2018
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It’s time for your Daily Hit of cannabis financial news for July 30, 2018.

On The Site

Scythian Biosciences

Last month Scythian Biosciences agreed to sell its interests and assets in Argentina, Columbia, and Jamaica to Aphria Inc. in a deal valued at $193 million. Now the company is taking that money to enter the Florida Medical Marijuana market in a deal valued at C$136 million.

Scythian signed a letter of intent (LOI) to purchase CannCure Investments Inc, which is an Ontario-based company that is itself in the process of acquiring an interest in the Florida-based 3 Boys Farms, along with The Healthcare Organization. In addition, the deal includes a Florida agricultural company that has a license to operate as a Medical Marijuana Treatment Center in the state. The deal is expected to close on or about October 15, 2018.

Insys Therapeutics

The FDA giveth and the FDA taketh away. On July 27, 2018, Insys Therapeutics (INSY) announced that the U.S. Food and Drug Administration declined to approve the company’s New Drug Application for Subsys, an opioid-based painkiller, on the grounds that it was potentially unsafe.

News of the denial on Friday sent Insys shares sliding by 9% to $6.62. For the last several years, Insys shares have been on the decline, due in large part to the company’s ongoing legal issues.

Organigram

Canadian-based Organigram Holdings Inc. (OGRMF) stock rose over 2% to approximately $3.43 after the cannabis delivered solid results for its fiscal third quarter. The company reported sales of C$3.7 million for the fiscal third quarter versus last year’s C$1.9 million in the same time period.  The company also reported net income of C$2.8 million for a sequential increase of 162% compared to $1.1 million in the second quarter. This easily topped last year’s third-quarter loss of $C2.3 million.

In Other News

Phivida Holdings

Phivida Holdings Inc. (PHVAF) won the approval of its Form 211 by FINRA, and the approval to graduate on to the OCTQX Best Market as a foreign issuer, with full DTC eligibility now in process. The Company’s common shares are scheduled to commence trading on the OTCQX under the symbol “PHVAF” effective July 30th, 2018.

Village Farms International, Inc.

Village Farms International, Inc. (VFFIF) and Emerald Health Therapeutics, Inc. (EMHTF) announced that their 50/50 joint venture for large-scale, low-cost, high-quality cannabis production, Pure Sunfarms, has received its cannabis sales license from Health Canada. Pure Sunfarms is now permitted to immediately begin selling product from its expanding inventory of high-quality dried cannabis, including to Emerald Health Therapeutics, under their previously announced supply agreement, as well as to address significant demand from other licensed producers. This sales license also positions Pure Sunfarms to secure supply agreements with provincial government distributors for the imminent legal adult-use marketplace.


Debra BorchardtJuly 30, 2018
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Last month Scythian Biosciences agreed to sell its interests and assets in Argentina, Columbia, and Jamaica to Aphria Inc. in a deal valued at $193 million. Now the company is taking that money to enter the Florida Medical Marijuana market in a deal valued at C$136 million.

Scythian signed a letter of intent (LOI) to purchase CannCure Investments Inc, which is an Ontario-based company that is itself in the process of acquiring an interest in the Florida-based 3 Boys Farms, along with The Healthcare Organization. In addition, the deal includes a Florida agricultural company that has a license to operate as a Medical Marijuana Treatment Center in the state. The deal is expected to close on or about October 15, 2018.

3 Boys Farms is a Florida LLC that was founded in May 1981. It has the authorization to cultivate, process and dispense medical cannabis in accordance with Florida law and operation consists of 40,000 square feet of fully-operational greenhouses located on an eight-acre parcel of land. According to the statement, 3 Boys Farms has already secured and/or is finalizing leases for locations in prime retail and medical corridors in Fort Lauderdale, West Palm Beach, North Miami Beach, Dania/Hollywood, Fort Myers, Port St. Lucie, Stuart and St. Petersburg, with additional locations slated for Orlando, Tampa and Jacksonville.

“Our strategic acquisition will position us for more rapid expansion using 3 Boys Farms’ dispensary sites and fully-operational, award-winning, sustainable cultivation facilities,” said Scythian CEO Rob Reid. “With the exploding patient population and an estimated $2.5 billion in total annual market revenue in 2025, Florida is emerging as one of the largest and fastest growing medical cannabis markets in the US with one of the highest patients/license ratios in America.”

The press release noted that Florida has seen strong growth in its patient base since January 2018, with an estimated 52% increase in registered patients during that time period. With a total population of over 21 million (including the largest population over the age of 65 in North America), Florida is poised to be one of the most dynamic medical cannabis marketplaces in the United States. Additionally, Florida is considering legalizing recreational use of cannabis, a move that would result in estimated 2025 annual revenues of $5.5 billion.

The Healthcare Organization is a professional association that is revolutionizing the way medical care is being delivered. It is an all-in-one health service provider that covers diagnostic testing for nutritional guidance and is prepared to cover all of its patients’ medical needs with six state-wide clinics in Florida. As part of the Acquisition, the Healthcare Organization intends to roll out 12 additional centers state-wide over the next 24 months, including the acquisition of primary care practices/groups, which will substantially increase the group’s patient base state-wide.

Terms

The statement said that Scythian will initially purchase 70% of CannCure and have an option to acquire the remaining 30%, all at the same valuation.  The first 70% will be acquired in exchange for $93,300,000 in equity and $43,200,000 in cash to be invested into CannCure by way of debt or equity.  The equity shall be paid in common shares of Scythian, issued to the shareholders of CannCure, at a price, which is the greater of $4.00 or the 20-day volume weighted average price at closing.  The maximum number of shares to be issued as a result of the acquisition of a 70% interest in CannCure is 23,325,000 common shares of Scythian. Scythian will also hold an option for 15 months from the date of closing to acquire the remaining 30% of CannCure.  The option for the remaining 30% of CannCure (or $58,500,000) shall be payable in cash or shares, at the discretion of Scythian.

Exchange Listing

Scythian wasn’t done with selling the Caribbean and Latin America to go to Florida, it is also planning on listing on the Canadian Securities Exchange. It will delist its shares from the TSX Venture Exchange and not seek its approval of the acquisition. Scythian said that it expects the new CSE shares to be listed over the next ten business days and until then the stock will be halted and no longer trade.

In addition, to those moves, Scythian is also withdrawing its application to list its shares on the NASDAQ (NDAQ), but will keep its shares on the OTC market under the ticker SCCYF.


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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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