Debra BorchardtAugust 26, 2020
Columbia Care Inc. (CSE: CCHW) (QTCQX: CCHWF) has said that it will buy The Green Solution (TGS) in an all-stock deal that is expected to close on September 1, 2020. The company did not disclose the size of the deal. Columbia Care stock jumped over 7% on the news to lately sell at $3.68.
Colorado-based TGS is said to have unaudited revenue through July 2020 of $52.7 million, which would be a year-over-year increase of 29% compared to 2019. Columbia Care said that the deal would be immediately accretive to Columbia Care’s Adj. EBITDA and, in combination with Columbia Care’s rapidly improving margin and profitability profile, will accelerate the company’s transition to being Adj. EBITDA positive in 3Q 2020.
“Closing the acquisition of The Green Solution represents a major milestone for Columbia Care,” said Nicholas Vita, CEO of Columbia Care. “This transaction aligned well with our national strategy to be the market leader in each of our key markets while adding a portfolio of brands and products to our suite of adult-use offerings across the country. The acquisition of TGS is immediately accretive to Columbia Care’s Adj. EBITDA and accelerates our transition to generating positive Adj. EBITDA into 3Q. Overnight, we have established a leading position in the world’s second-largest cannabis market. We added profitable scale to our national portfolio of brands and products and will continue to expand our market share in Colorado as we have done nationally – by offering consumers the highest quality products, best selection, most trusted customer experience, targeted brands, and competitive wholesale offerings. We are grateful to our partners at TGS and applaud their vision and dedication to build one of the most successful companies in the industry. The entire Columbia Care team looks forward to working with the TGS organization and leadership as we pursue our joint goal of being the leading cannabis operator nationwide.”
TGS is a family-founded and operated business. It was awarded first place for its Supernova Cone and second place for its NectarBee Root Beer in The THC Classics 2020, TGS has remained an industry leader through proprietary technology and innovation, as well was through continually introducing new verticals, including a family of cannabis brands.
The Colorado market had been closed off to investments form publicly traded companies, but that was recently changed. As such, Columbia Care has become one of the first publicly traded companies to acquire a Colorado cannabis business. TGS has 23 dispensaries, many located in the Denver metro area and tourist destinations such as Aspen. The deal will boost Columbia Care’s reach to 95 facilities open or under development, including 73 dispensaries and 22 cultivation and manufacturing locations, covering 18 jurisdictions in the United States and the European Union.
The company supplies its own dispensaries along with its wholesale distribution network from its six operational cultivation facilities and one highly-automated manufacturing facility. Additionally, a Columbia Care affiliate was recently awarded the opportunity to pursue a marijuana hospitality business license in Adams County, one of the first consumption lounges in the state.
The company statement said that TGS has performed well in 2020 despite headwinds caused by COVID-19. As a core principle of its national strategy, Columbia Care expects to leverage TGS’s leadership position to serve as a consolidation platform for the fragmented Colorado market. Recently enhanced cultivation and manufacturing infrastructure will enable TGS to continue to expand margins while capturing incremental market share through M&A, the acceleration of its wholesale operations, implementation of additional manufacturing automation infrastructure, SKU optimization (including the launch of Columbia Care’s medical, health and wellness focused products), expanding outdoor cultivation (to solidify its position as the low cost producer of cannabis) and provide a unique customer journey by investing in and expanding dispensary operations.
“We met with most of the largest operators and are thrilled to have found a trusted partner in Columbia Care to see the vision we have always held for The Green Solution,” said Kyle Speidell, who co-founded and operates TGS with his brother, Eric Speidell. “This is a landmark acquisition that allows us to bring Columbia Care’s expansive product portfolio to our customers in Colorado, as well as enables us to quickly expand our brands, products and expertise to every major market in the US. We look forward to our continued success and growth, locally and nationally.”
William Sumner
