Vireo Health International, Inc. (CNSX: VREO)(OTCQX: VREOF) closed on the first tranche of a non-brokered private placement offering of 13,651,574 units of the company at a price per Unit of C$0.77 for up to a total amount of $10 million. The stock moved higher by 2% on the news and was lately trading at 53 cents.
“This financing reflects the confidence of the capital markets in the potential growth of sales and margin for Vireo,” said Executive Chairman, Bruce Linton, who is a director and insider at Vireo. “There are significant opportunities across our existing footprint to leverage increasing scale to improve sales growth and operating performance, especially considering that we anticipate as many as seven of our medical-only state markets could enact recreational-use legislation over the near- to mid-term future.”
Vireo said it plans to use the proceeds to fund various growth initiatives, as well as for working capital and general corporate purposes. Additional tranches may be closed on or before April 17, 2020. The company said it does not expect the Warrants to be listed on any securities exchange.
Like other cannabis operators, Vireo said it has been cutting costs. The company said it has “implemented several strategic initiatives over the course of the last 90 days in order to optimize its cost structure and operating model. Since December 2, 2019, these actions have reduced corporate overhead and SG&A expenses by approximately 25 percent on an annualized basis.”
The company has been very active in 2020. It signed a Union contract for its workers in Maryland. The company also announced a partnership with CB2 Insights (CBII) in which CB2 would oversee the protocol development and Investigational New Drug (IND) Application directly with the US Food & Drug Administration (FDA). The successful completion will position Vireo for industry leadership when it comes to cannabis-based topical medication used to treat pain.
Last month, Vireo announced a partnership with Leaf Trade to provide a wholesale order and fulfillment management platform in four states where Vireo operates. Leaf Trade is an omnichannel sales platform that allows Vireo’s wholesale business to come online quickly and easily in new markets as the Company expands its operations nationally.