The legal cannabis industry is as vibrant as ever, including Canopy Growth Corp. (NYSE:CGC)(TSX:WEED) securing the rights to acquire U.S. multi-state operator Acreage Holdings (OTC:ACRGF)(CSE:ACGR.U) in a deal valuing Acreage at $3.4 billion and PAX Labs completing a record-breaking $420 million financing round.
Cannabis One (CSE:CBIS) is not missing a beat to grow its business as a "House of Brands" throughout North America. Only days after closing the acquisitions of Honu brands of Fat Face Farms, the operator of a premium cannabis cultivation facility in Denver, the company finalized a deal to acquire assets under ownership of three different parties (3480 Investors, LV 3480 Partners and Agro Finance) broadly referred to as Evergreen Organix.
Per the deal, Cannabis One is buying Nevada State-issued cannabis cultivation and manufacturing licenses and related infrastructure, such as manufacturing equipment, product formulations, intellectual property, warehousing and logistics operations and manufacturing agreements with partners. The aggregate value of the acquisition is $47.7 million, payable in cash and stock and including the assumption of $14.4 million in liabilities.
Management expects the buyout to be immediately accretive, estimating that the Evergreen Organix channel will add $15.0 million to revenue in fiscal 2019. Earnings before interest taxes, depreciation and amortization (EBITDA) is guided in the range of 23.0%-30.0%.
The merger tucks in neatly towards Cannabis One’s goal to generate $116 million in system-wide revenue during fiscal 2019.
The acquisition includes popular and award winning brands, including the flower brand "Fleur" and cannabis-infused product brands "Evergreen Organix" and "EG.O". A sample of some of the accolades of the products coming under Cannabis One’s umbrella include Fleur’s "Fire Angel" strain being named "Best CBD Flower" and Evergreen Organix’s "Chocolate Chip Cookie" winning “Best Edible” at the 2018 Jack Herer Cup.
Cannabis One’s portfolio will now include INDVR, INDVR Fire, INDVR Strains, Honu, Fat Face Farms, Fleur, Evergreen Organix and EG.O, as well as rights to manufacture and sell Flav, West Edison and Cheech’s Private Stash licensed product lines. The product bag is diversified, hosting topicals, dried flower, creams, oils, lotions, bath products and lip balms. The company’s flagship retail location is branded "The Joint™".
The acquisition is squarely in line with Cannabis One’s strategy to bring popular brands under its banner and into its growing distribution network as it becomes a multi-state operator, akin to Acreage Holdings. The company immediately has a substantial presence in Nevada, where management estimates Evergreen Organix products are on the shelves in 93% of dispensaries in the state.
All told, Evergreen Organix has manufacturing and distribution relationships covering California, Nevada, Colorado, Washington, Montana and Oregon.
Moreover, the acquisition further broadens Cannabis One’s overall capacity, adding more than 27,000 square feet of cultivation capacity and 6,000 square feet of manufacturing space. Cannabis One and its partners now operate approximately 100,000 square feet of manufacturing facilities in Colorado, Nevada and Washington, three states where recreational marijuana is legal.
Based on current market prices, Cannabis One management says it has production capacity to generate almost $1.0 billion in annual sales.
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