EDMONTON, Dec. 13, 2018 /CNW/ - PRESS RELEASE - Aurora Cannabis Inc. has announced that it has entered into an agreement to invest $10 million by way of brokered private placement in High Tide Inc., a privately held, Alberta-based, retail-focused cannabis and lifestyle accessories company. In total, Aurora will receive 10,000 senior unsecured convertible debentures issued by High Tide priced at $1,000 per debenture, bearing an interest rate of 8.5 percent per annum, and convertible in aggregate to 13,333,333 common shares of High Tide at $0.75 per share.

High Tide is developing an expanding network across Canada of cannabis and cannabis accessory retail stores, as well as manufacturing and distributing branded cannabis accessories. Through its two wholesale businesses, Famous Brandz and RGR Canada, and the 19 existing Smoker's Corner retail locations, High Tide serves more than 170,000 retail customers per year. Through Canna Cabana and eventually KushBar, High Tide currently operates 4 retail stores in Alberta, with additional leases secured with the intention of opening new locations across Canada in the near future.

"In addition to four operational cannabis retail stores, High Tide has developed a broad network of smoking accessories and cannabis lifestyle stores that feature unique products, supported by strong branding that has resonated well with Canadian consumers," said Terry Booth, CEO of Aurora. "Through our investment, we gain exposure to two unique retail store concepts currently launching across Canada, as well as established cannabis culture brands and thousands of proprietary accessories. We look forward to working with the team at High Tide and supporting them as they execute on their aggressive growth strategy."

Raj Grover, president and chief executive officer of High Tide, added, "We're thrilled to gain the support and backing of Aurora as we continue to rapidly execute on a significant number of growth initiatives across Western Canada. Our wholesale and retail segments are performing strongly in the post-legalization environment, especially with our new cannabis retail stores providing a significant amount of momentum.  Furthermore, we are well positioned to pursue additional opportunities in Ontario's upcoming retail market. With a strong portfolio of branded products and retail stores, we're quickly becoming one of Canada's largest retailers of cannabis products and lifestyle accessories."

High Tide's vertically-integrated portfolio of businesses includes:

Canna Cabana

• An approachable, playful and sophisticated network of retail cannabis stores currently being opened across Canada.
• 4 stores currently open and performing strongly in Calgary, Edmonton, Lethbridge and Whitecourt.
• In Alberta, the maximum of 37 retail locations has been targeted with substantially all leases, permits and licenses secured to date.
• Also seeking to establish the maximum of 8 retail cannabis stores in in British Columbia as well as the maximum of 75 retail cannabis stores in Ontario.

KushBar

• A complementary retail concept that provides consumers with elevated experiences featuring proprietary products, excellent customer service and modern décor.
• Strategically targeting store locations in Alberta and Ontario.
• High Tide owns 50.1 percent of KushBar Inc.

RGR Canada

• An innovative designer, manufacturer and distributor of cannabis accessories.
• High quality, low cost and global manufacturing network in place.
• Extensive product catalog which contains more than 4,200 unique SKUs, of which over 3,000 are designed by and proprietary to High Tide.

Famous Brandz

• Premier manufacturer and distributor of licensed, branded smoking products through partnerships with celebrity and entertainment brands like Snoop Dogg, Guns N' Roses and Paramount Pictures.
• Distribution agreements covering Canada, the United States and Europe; licensing agreements with unlimited global access.

Smokers Corner

• Canada's largest counter-culture chain which has served Canadian cannabis consumers since 2009.
• Growth to 9 corporate owned and 10 franchise locations across British Columbia, Alberta and Nova Scotia.
• Canadian Franchise Association approved franchise program in place to drive rapid nationwide store expansion.

Terms of Investment

Aurora has made a $10 million investment in High Tide by way of a brokered private placement. The debentures will bear interest at a rate of 8.5 percent per annum from the closing date of the final tranche of the offering, payable on the last business day of each calendar quarter. The debentures are convertible to common shares of High Tide at a post-split price of $0.75 per common share and will mature two years from the closing date of the offering. The debentures are subject to a statutory hold period that extends four months and one day from the closing date of the offering.

As Canada’s adult-use market nabs international headlines, the backdrop continues to be one of ongoing consolidation across the country’s 126 licensed cultivation businesses. Aleafia, a vertically integrated Canadian medical cannabis company, announced Dec. 19 that it will acquire Emblem Corp., itself a vertically integrated Canadian medical cannabis company, for a 27-percent premium. 

The $173-million all-stock deal creates a major medical cannabis producer with access to a combined 60,000 patients across 40 clinics. Through Aleafia’s Canabo Medical Clinic network and Emblem’s education-focused GrowWise Health, the patient base gives the newly constituted company (which will operate under the Aleafia name) increased capacity for growth.

In more specific terms: Emblem shareholders will receive 0.8377 of an Aleafia common share in exchange for each Emblem common share, according to the press release announcing deal. Emblem CEO Nick Dean said that he expects those Aleafia shares to appreciate in the new year. All told, Aleafia shareholders will control a 59-percent stake in the combined company; Emblem shareholders, following the deal, will control 41 percent.

Aleafia CEO Geoffrey Benic said the deal represents a “tremendous opportunity” for Canadian patients during a Dec. 19 appearance on Midas Letter. “You’ve got to look for great assets that can transform your business—and they’re complementary to what you’re doing—and you consolidate,” Dean said. 

In describing the deal, he spoke about ongoing supply constrains in Canada. Aleafia will take on more of the classic licensed producer role, by leveraging Emblem’s extraction capacity and product innovation and providing greater access to its Canabo Medical Clinic patient base. Aleafia has the existing patients; Emblem has the existing production capacity, Dean said.

In September 2018, Emblem signed a supply agreement with Aphria, which will work into Aleafia’s planned annual capacity of approximately 138,000 kg after this latest deal.

“The Emblem acquisition rapidly accelerates the execution of Aleafia’s strategy to become a vertically integrated, diversified cannabis company. It is difficult to overstate the significance of securing the highest quality medicine for our patients and Aleafia,” Benic said in a public statement. “Emblem’s product leadership in the medical and adult-use sectors and highly coveted supply agreements will perfectly complement Aleafia’s cannabis production and clinic operations.”

And the deal doesn’t stop at the Canadian border.

According to the press release: “Through Emblem’s joint venture with German pharmaceutical wholesaler Acnos Pharma GmbH, Aleafia expects to access the world’s largest medical cannabis market serving more than 82 million people, with access to approximately 20,000 pharmacies, along with access to Australia’s burgeoning medical cannabis market upon completion of Aleafia’s previously announced transaction with CannaPacific Pty Ltd.”