SANTA ANA, Calif., April 10, 2018 - Kush Bottles, Inc., a provider of packaging, supplies, vaporizers, accessories and branding solutions for the regulated cannabis industry, announced today it has entered into a merger agreement to acquire Summit Innovations, LLC, a distributor of hydrocarbons to the legal cannabis industry based in Denver, Colo. Hydrocarbon gases are used to turn cannabis plants into oils, and this acquisition marks Kush Bottles’ entry into a new business vertical supplying gas to cannabis extractors. The transaction is expected to close by May 1, 2018, subject to confirmatory due diligence and certain closing conditions, including (among others) approval of the transaction by the equity holders of Summit Innovations, according to a press release.
Summit Innovations serves the rapidly growing concentrates segment of the cannabis industry and operates seven distribution facilities located across the country. Its four core products are high purity butane, propane, iso-butane and blends. Summit Innovations works closely with legal cannabis manufacturers to ensure cleanliness, product quality, safety and compliance during the extraction process.
Nicholas Kovacevich, CEO and chairman of Kush Bottles, commented, “Summit Innovations supplies hydrocarbon gases specific to various cannabis extraction processes. Integrating this broad gas portfolio into our large distribution platform will further diversify our business by offering another unique product line that is highly complementary to Kush Bottles’ existing product inventory. This transaction, once closed, will simplify the supply chain for future and existing customers of Kush Bottles and Summit Innovations, allowing customers to fulfill all their concentrate refining and packaging needs more efficiently from just one source. This acquisition agreement aligns with Kush Bottles’ company strategy, to both grow organically and through acquisitions, further demonstrating our commitment to achieving long-term growth and diversifying our business within the cannabis space.”
Kush Bottles built its initial client relationships by providing much-needed cannabis packaging solutions and has since expanded into several other verticals within the industry. To focus efforts towards the concentrates segment of the cannabis industry signals that Kush Bottles is no longer solely a packaging business, but a leading provider of a diversified suite of products and services that are integral to the proper functioning of the cannabis supply chain. The company continues to evaluate new technologies and developments within the industry to determine how it can add the most value for its customers.
Under the terms of the merger agreement, Summit Innovations, LLC will merge into a wholly-owned subsidiary of Kush Bottles in exchange for 1,280,000 shares of Kush Bottles common stock and $3.2 million in cash, a portion of which will be held back to satisfy certain post-closing obligations. Kush Bottles will also issue up to an additional 1,280,000 shares of Kush Bottles common stock if the Summit Innovations business achieves certain earn-out milestones of up to $12.0 million in eligible revenues during the twelve-month period following closing.
