Multistate cannabis operator Red White & Bloom Brands (RWB) announced July 22 that it had signed a binding letter of intent to acquire Platinum Vape, a producer of vape cartridges, edibles and flower that is spearheaded by father-and-son team George and Cody Sadler.

Previously focused on the Michigan, Illinois, Massachusetts and Florida cannabis markets, RWB will enter California’s market through its first acquisition since going public earlier this year.

Platinum sells its products at more than 700 retailers throughout Michigan, California and Oklahoma, and co-founder and President George Sadler said the company has been building a relationship with RWB for the past few years.

“It was maybe three years ago when [RWB] talked to us about doing a purchase and at that time, it just didn’t work out—[it] just didn’t seem feasible,” Sadler told Cannabis Business Times and Cannabis Dispensary. “This all came along kind of rapidly, but our relationship has been there for quite some time.”

For Sadler and his son, Cody, Platinum Vape has been their baby for the past nine years, since the company’s inception, and both Sadler and RWB CEO Brad Rogers said they view the acquisition as more of a partnership between the two companies.

“It’s not something we want to do in a walkaway deal,” Sadler said. “It was more incorporating us with what their future plans are and growing. Having that freedom for Cody and I has been paramount.”

The acquisition will not change the structure of Platinum’s business, he added, and Rogers agreed that the Platinum team will be critical in the future success of both companies.

“When you buy Jack Daniels, you want Jack to come with it,” Rogers said. “I wouldn’t even look at it as a buy, really. It’s a partnership because these guys aren’t going anywhere. … This is a phenomenal operation. We don’t want to touch it other than [to] give them the resources and the power to go and build.”

Platinum’s roughly 200 employees will continue in their roles, Sadler added, and RWB’s support will allow the company to continue to grow.

“It’s on a path, but I think now, with Red White & Bloom, it’s a much bigger path,” he said. “I think together, we’re going to see a lot of the growth.”

Photo courtesy of Red White & Bloom

The merger reflects the broader M&A landscape in the cannabis industry, Sadler added, pointing to the market’s explosive growth in 2017 versus the slowdown the industry has seen in recent months.

“These companies have been valued at a billion dollars, and look at what some of these companies have done,” he said. “Some have finished off these deals on paper only, and there’s no backbone to any of these deals other than inflated values that go into the market and get people to purchase overpriced stock. … That’s why this deal here, I think, is pretty solid. [It looks] to the truth of where these companies are and … [where they will be in] the future versus just, ‘Hey, you’re worth this much money. We’re going to pay you out and then you’ll be on your way.’ … Platinum Vape is going to be around for a long time, not just [the] next year or two and then get liquidated and thrown off to the side.”

For Rogers, the value of the acquisition lies in reaching Platinum’s broader audience and market share with the Sadlers’ vision leading the way.

“On our end, … there’s no change on the direction, just a lot of backbone from Red White & Bloom,” Sadler said.

Platinum will continue its planned expansion to Arizona’s market, he added, as well as continue with planned product launches in the coming months. However, the company can now lean on RWB’s deeper knowledge of operating in multiple states to more rapidly achieve its goals.

“I just see [these things] happening a lot quicker, and with the depth that we now have, there’s a lot more knowledge behind it,” Sadler said.

RWB is in discussions with Big Box retailers, such as Walgreens and CVS, to expand product distribution across the U.S., and will rely on Platinum’s brand awareness and robust marketing strategies to grow both brands.

“George and Cody are integral in the growth and the pieces of how this is going to play out and what we’re bringing together right now,” Rogers said. “You’re going to see a lot more come from us collectively in a very short order."

BOSTON (28 July 2020) - Boston City Councilors Lydia Edwards and Kim Janey have filed amendments to Boston’s cannabis equity ordinance in an effort to bring transparency to the municipal approval process for marijuana businesses by changing the process for executing host community agreements. The Boston Cannabis Board adopted its final rules and regulations on July 22. Under those rules and regulations, the host community agreements are negotiated after approval by the BCB and there is no set timeline for their execution.

“I want it to be clear that review by the BCB of an application is the final point in the approval process before a business goes to the CCC. There can be no equity without transparency,” said Councilor Edwards. “If host community agreements are still being negotiated behind closed doors and there is no firm timeline on when they will be executed, entrepreneurs will continue to struggle with the lack of predictability that we have had for the last three years. This is the biggest frustration I have heard from people trying to get into the industry. They are paying rent every month and get no answers from the city about when they might be able to move on to the state application. I’m looking to fix that.”

“We cannot continue to force entrepreneurs - some of which have been in the pipeline for years - across our city to indefinitely throw money out the window with no clear timeline for the City’s application process,” said Council President Kim Janey. “The original legislation that formed the Boston Cannabis Board was focused on equity and transparency. The amendment we have filed will further strengthen this ordinance and the board's process by creating a clear and transparent timeline for negotiating host community agreements.”

Under the proposed changes, the host community agreement negotiations would start within three days of the required community outreach meeting and a draft version of the agreement would be given to the applicant within 10 business days of that meeting. The negotiated agreement would then be reviewed by the Boston Cannabis Board as part of its review of a complete application. If the application is approved the agreement would be executed.

In addition to changes to the host community agreements, Councilor Edwards’ proposal also establishes the 1:1 minimum ratio of equity to non-equity licences for the various license types issued by the CCC. The CCC is only issuing delivery licenses to equity applicants for a two year period.

“We need to make sure that equity applicants are going to have the same opportunities to open dispensaries as non-equity applicants,” said Councilor Edwards. “My concern is that the BCB will be issuing equity licenses to delivery businesses over the next few years and if we don’t adjust the 1:1 ratio to include different types of businesses, non-equity applicants could get a much higher number of licenses to operate dispensaries than equity applicants.”