LOS ANGELES, June 10, 2019 (GLOBE NEWSWIRE) PRESS RELEASE -- Ventura Cannabis and Wellness Corp. announced today that it has entered into a binding agreement to acquire a cannabis dispensary based in Oakland, California that specializes in delivery of cannabis to the entire Bay Area. The business is expected to generate $1 million in annual revenue with EBITDA of $100,000, not including the revenues and profits generated from selling Ventura Cannabis branded product lines through the dispensary. The total combined cost, including all fees and expenses, of the transaction, is expected to be a cash outlay of $1 million at closing. Additional payments of $375,000 cash and $295,000 stock will be paid over time depending upon performance. The management will retain operational control of the dispensary.
The dispensary will be added to the network of dispensaries in California that Ventura Cannabis has acquired, pending close. These dispensaries will act as a distribution network for the CannaSun brand and other in-house brands being actively developed.
As previously announced, Ventura Cannabis has signed a purchase agreement to acquire a vertically integrated business that recently launched a vape brand that it manufactures. At this time, the brand’s sales are limited to its local geographic area. The facility is currently producing cannabis vape products at less than an estimated 7% of capacity, or $750,000 annually.
The facility, at full production, which would require an additional capital expenditure of approximately $550,000, can produce an estimated $12 million in annual revenue with projected 50% gross margins at today’s market prices for vape products in California.
“We continue to build out our large California dispensary network with this agreement,” said Chris Heath, President of Ventura Cannabis. “This Oakland based company specializes in delivery around the Bay Area, and we see significant growth potential as we push our CannaSun product line, and other in-house brands currently in development, through their expanding customer base once we close. The CannaSun brand has yet not been marketed in the Bay Area, and we believe the next generation of CannaSun, and other in-house branded products will appeal to the key demographic of affluent and upwardly mobile Bay area professionals who seek discretion in the use of cannabis products. We continue to work through our large and growing pipeline of attractive acquisition targets. Our goal is to create the largest possible dispensary network in California for ourselves with the smallest cash outlay possible. As our pipeline grows, we continue to see better terms from sellers with healthy, scalable businesses. Our goal of exiting 2019 with a revenue run rate of $10 million annually is intact, and we are comfortable that we have the deal pipeline and balance sheet to achieve that goal.”
Closing of the acquisition is subject to a number of customary conditions, including receipt of all required regulatory approvals.
Additionally, Ventura Cannabis has decided to renegotiate the terms of the Remedy Purchase Agreement announced February 12, 2019 with the aim of reducing the total consideration paid, including the cash outlay. The Agreement has been terminated and the parties are working toward a revised Agreement.
