- Florida’s cannabis market is the third-largest in the U.S., with 2020 medical marijuana sales exceeding $1.2 billion
- Upon closing of the deal, RWB will have operations or brands in 6 of the top 10 U.S. states, which generated combined revenue of over $8.8 billion last year
Red White & Bloom (CSE: RWB) (OTCQX: RWBYF) announced this morning that the company has struck a deal with Acreage Holdings (CSE: ACRG.A.U) (OTCQX: ACRGF) (FRA: 0VZ) to acquire its Florida operations. Per the terms of the definitive agreement with Acreage subsidiary HSCP LLC, RWB will purchase all of the issued and outstanding shares of Acreage Florida.
Red White & Bloom will utilize a newly incorporated subsidiary in RWB Florida LLC to facilitate the transaction. The deal will also see RWB acquire certain owned and leased real estate assets used by Acreage Florida in its operations.
Florida is the third-largest market by revenue in the United States. Acreage Florida is licensed to operate medical marijuana dispensaries throughout the state, as well as a processing facility and a cultivation facility.
Also included in the acquisition is a 15-acre property located in Sanderson, Florida. On the Sanderson property sits a 113,546 sq ft cultivation facility and 4,360 sq ft freestanding administrative office building. Both the cultivation facility and the office building are included in the deal. On top of that, RWB will have access to Acreage Florida’s 8 leased retail stores located on prime real estate throughout the Sunshine State.
Once the deal closes, RWB plans to immediately introduce its award-winning Platinum Vape brand to the Florida market. Also, as previously outlined by RWB, the company holds the rights to High Times branded products in Flordia, which it will leverage after closing the Acreage Florida acquisition.
“Our core strategy has always been to focus on a limited number of markets within which to operate at scale, and Florida has always been one of those targeted markets. Today we have our path to entry into the third-largest market by revenue in the US and are excited with what we can do with the brands we have amassed as well as the skill to execute on our vision,” commented RWB Chairman & CEO Brad Rogers.
Including the recently announced Illinois acquisition, RWB is poised to expand its footprint in U.S. States that have a limited number of cannabis licenses. Following the completion of all outstanding acquisitions, RWB’s American footprint, including states that the company has licensed operations or licensing of its brands, could soon expand to include 7 states. Those states include Michigan, California, Oklahoma, Massachusetts, Arizona, Illinois and Florida.
In exchange for Acreage Florida, RWB will pay Acreage Holdings USD $60 million in cash, stock, and other cash considerations. The deal’s compensation structure will be made up of the following:
- An up-front cash payment of USD $5 million
- An additional cash payment of USD $20 million
- USD $7 million in RWB common stock, subject to certain sale restrictions and voluntary leak out agreements
- USD $28 million in vendor take-back promissory notes made up of a USD $10 million 7 month note and a USD $18 million 13 month note
The deal is subject to several customary closing conditions, and the company expects the acquisition to close in Q2 2021.
For full details regarding the acquisition’s terms and conditions, please refer to the company’s official press release here.
RWB Stock Price Action & Chart
Shares of RWB’s CSE-listed RWB stock rocketed higher in response to this morning’s news, with the stock currently changing hands at $1.69 per share, up +5.63% on the day.
The company’s American-listed RWBYF shares are up +6.25% this morning, with the stock trading at $1.36 per share.
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