[Press release] The Canadian Bioceutical Corporation today announced that the Company, through its wholly owned U.S. subsidiary CGX, is exercising its option, and is acquiring a 100% interest in GreenMart of Nevada LLC (“GreenMart”), an award winning licensed cultivation, production and wholesale business located in Las Vegas, Nevada. Management anticipates closing the transaction on or before May 30, 2017.
Transaction highlights:
- Creates strong presence in Las Vegas adult use market with over 42 million visitors annually.
- Existing licensees have 12-18 month headstart to establish market share.
- Fully operational, fully staffed, state-of-the-art licensed production facility, with capacity to produce 1.6 million grams of dried flower and 85,000 grams of high-margin concentrate.
- Operations include production of concentrates, as well as edible and other high-margin infused products.
- Company has commenced selling wholesale into the Nevada medical cannabis market, as well as is applying for a dispensary license to enter the higher-margin retail market.
- 2016 Jack Herrer Cup winner for best hybrid concentrate.
- Arcview Market Research projects annual legal cannabis sales in Nevada to grow to an estimated US$630 million by 2020.
- Attractive valuation at $19 million:
- $9.5 million, non-interest bearing promissory note
- $9.5 million in units, each unit, priced at CAD$0.75
- $9.5 million, non-interest bearing promissory note
“Commencement of sales into the adult use market in Nevada, under the state’s “Early Start Capitalized” program, is anticipated for July of this year, with a 12-18-month early mover advantage for existing licensees,” stated Scott Boyes, CEO. “In order to benefit from the strong revenue and cash flow growth anticipated for GreenMart, we decided to accelerate exercising our option and acquire the company. We anticipate the operations to be materially accretive for revenues and earnings in the current fiscal year. We are delighted to bring GreenMart and its award winning products under the BCC umbrella, and we look forward to reporting on our progress as we continue to execute on our aggressive growth strategy.”
Beth Stavola, COO of BCC, added, “GreenMart is fully staffed and operational, and is extremely well-managed. In developing the Nevada business, we are leveraging the operational and commercial best practices developed at our highly successful Health for Life and MPX brands in Arizona. We anticipate this will accelerate market share development in a potentially very sizeable market with strong barriers to entry. Additionally, the shared operational template facilitates integration.”
In January 2017, BCC completed the acquisition of a number of cannabis operations supporting cultivation, production, as well as two dispensaries (Health for Life) and a wholesale concentrates brand (MPX) in Arizona, creating a highly profitable platform for growth. As part of the transaction, BCC had acquired a fixed option on the Nevada assets of the sellers, namely GreenMart of Nevada, which it is now exercising.
GreenMart has developed a state-of-the-art cultivation facility, based on the experience gained at Health for Life and MPX in Arizona where the Company is approaching a consistent rate of one harvest per week. Furthermore, the Company operates best-in-class extraction technologies, which enabled MPX to win the coveted 2016 Jack Herrer Cup for best hybrid concentrate. Addressing the higher margin market of edibles, GreenMart has installed a professional-grade custom kitchen operation, enabling the Company to carry a well-diversified portfolio of high-end products.
GreenMart, which commenced cultivation in October 2016, is located in North Las Vegas, and is applying for a dispensary license. Wholesale activities in the medical market started February 2017.
