DENVER, April
21, 2021 (GLOBE NEWSWIRE) -- PRESS RELEASE -- General Cannabis Corp today
announced that it has entered into a definitive agreement to acquire Trees, a
cannabis retail operator with dispensaries in Colorado and Oregon. The
transaction, which is subject to regulatory approval, will provide the company
with a foundational retail platform from which to expand growth.
The
transaction is the latest milestone for General Cannabis, a Colorado-based
company whose strategy is to identify, acquire and operate licensed cannabis
facilities in mature markets. Over the last year, General Cannabis became one
of the first public companies to receive a suitability approval from the
Colorado Marijuana Enforcement Division to acquire licensed cannabis assets,
acquired and integrated SevenFive Farm (a 17,000 square foot light deprivation
greenhouse outside of Boulder, CO), strengthened its board and management team
and completed a series of capital transactions which bolstered its balance
sheet and added working and growth capital. In addition to SevenFive Farm, the
company operates Next Big Crop, a subsidiary that provides design, consulting
and operational services to cannabis cultivation facilities throughout the
country. Total revenue for General Cannabis nearly doubled in 2020 from 2019.
Trees
currently operates a dispensary in Denver, Colo., and two dispensaries in
Portland, Ore. Revenue for the three existing stores was approximately $18
million in 2020. In the coming months, Trees anticipates opening one additional
dispensary in Denver and one in Portland, which would bring its total
dispensary count to 5 locations. The addition of the Trees footprint will make
General Cannabis vertically integrated in Colorado.
Carl Williams,
chairman of the board of General Cannabis, said, “This is a transformational
acquisition for us. Over the past year, we have strengthened our team and our
balance sheet to be able to capitalize on an opportunity like this. When we
close this transaction, we anticipate that our consolidated revenue will at
least triple. We expect to become cash flow positive from operations as all
stores open and ramp. Equally important, we instantly develop a retail
foundation and add personnel with deep retail experience.”
When the
transaction closes, the senior leadership of Trees will become an important
part of the General Cannabis team. Tim Brown, the founder and CEO of Trees,
will become a member of General Cannabis’s board of directors and join the executive
management team. Trevor Hoffman, co-founder and President of Trees, will also
join the executive team. General Cannabis will change its name to Trees as soon
after the closing as practicable, though it will retain its trading symbol
CANN.
Steve Gutterman,
CEO of General Cannabis, said, “Today’s announcement represents a massive step
forward in executing on our rollup strategy. In acquiring Trees, we are adding
a retail platform that is successful today and will be the backbone of future
growth. Tim, Trevor and the Trees team bring incredible depth and know-how.
They deeply and passionately care about their customers. And the name ‘Trees,’
which suggests health and growth and nature and, of course, cannabis – and has
a passionate fan base – is a perfect representation of our combined vision.”
General
Cannabis will acquire Trees for approximately $39.5 million of total
consideration, or 2.2 times Trees’s 2020 revenue. Approximately 13%, of this
consideration will be paid in cash over 24 months and 87% will be paid with
General Cannabis common stock. The Company will issue 38,745,193 shares to
Trees shareholders upon closing; the number of shares is calculated by dividing
the stock consideration by $0.89 per share, the 15-day volume weighted average
price from March 24th – April 14th.
To pay the
cash at closing, the Company has expanded its convertible debt round by $2.3
million, to an aggregate of $6.9 million. In total, the Company has raised
approximately $10 million over the past nine months. These funds have and will
be used to strengthen the Company’s balance sheet and provide capital for
growth opportunities like this acquisition.
Trees CEO Tim Brown said, “Everything we do, we do for our customers and without them – and our amazing employees – we wouldn’t be here today. We are excited to join the team because General Cannabis shares our values and our vision. This transaction will allow us to grow – our way. We are excited to bring Trees to more customers and to continue to build a business that is by weed people for weed people.”