- On Friday, Red White & Bloom Announced a Blockbuster Deal with High Times to Acquire the Licensing and Branding Rights for High Times Dispensaries and Cannabis Products (CBD & THC) in Michigan, Illinois and Florida
- Over 70% of RWB’s Fully Diluted Shares, Including Shares Held By Management and Founders, Are Under Lockup, Escrow or Some Form of Trading Restriction, Leaving Investors with a Very Attractive Public Float
Red White & Bloom Brands (CSE: RWB) (OTC: TDRYD) provided an investor update following the competition of its reverse takeover of Tidal Royalty, which saw RWB shares commence trading this past Friday on the CSE.
In connection with the RWB’s go public transaction, certain shareholders, including management and founders of the company, have entered into voluntary escrow and leak out agreements totalling 36,844,823 common shares and 3,200,000 stock options.
Additionally, 108,726,349 series II preferred shares and options to acquire 7,401,429 series II preferred shares are restricted for 7 months. Lastly, RWB’s Michigan investee shareholders have agreed to participate in a voluntary share escrow agreement for the shares to be issued in connection with the closing of the acquisition.
Collectively these agreements mean that over 70% of the fully diluted shares of the company are in some form of escrow, lockup or subject to a trading restriction. Additional details of the transaction can be found in the press release issued on April 28, 2020, and in the Listing Statement posted on the company’s disclosure section of the CSE website.
RWB’s U.S. footprint currently spans Michigan, Illinois and Massachusetts. With a combined cultivation footprint of over 4,000,000 square feet, 600 employees and 22 individual facilities, RWB’s mandate is to operate at scale in select states that provide the greatest return for our partners and shareholders.
RWB has advanced over US$75 million to its investee in Michigan. The company does not report the financial performance of the investee in its financials, as it has not yet exercised its irrevocable option to acquire 100% ownership of the investee. The company intends to exercise this option, subject to the successful completion of RWB’s licensing to operate within the state of Michigan, which application is in the process now.
The Michigan investee currently holds numerous licenses within Michigan covering the entire cannabis value chain; they are strategically located throughout the state to service the majority of its 10 million residents. The investee currently owns the assets of 18 dispensaries (referred to as provisioning centers in Michigan); 10 of these operating dispensaries have achieved approximately US$70 million in trailing revenues1 over the last 12 months. The remaining 8 dispensaries are at various stages of development, are expected to open in calendar 2020 and be accretive to the current revenue run-rate. With the COVID-19 pandemic and state shelter in place orders taking effect, the investee was able to quickly pivot the business to include delivery and curbside pick-up and within days saw an actual increase in revenue from the stores while providing a safe environment with appropriate social distancing and health and safety procedures in place for its employees and customers.
RWB’s Michigan Investee is vertically integrated with two operational indoor cultivation facilities, an outdoor cultivation facility, and various additional cultivation and manufacturing locations coming on stream to increase their margins and meet their demands for 2020 and beyond.
Also, RWB entered into a definitive agreement as announced on June 5, 2020, with High Times to acquire the rights to exclusively brand both medical and recreational dispensaries and cannabis products within the States of Michigan, Illinois and Florida. RWB plans to sub-license its rights to its investee in Michigan, subject to regulatory approval and closing of the High Times transaction.
RWB’s Illinois subsidiaries own and operate America’s largest indoor CBD cultivation facility, which is 3.6 million sq ft and sits on 236 prime agricultural acres in Putnam County, IL.
The facility is focused on producing high-grade cannabinoids, complete with Certificate of Origin documentation, on a year-round, consistent basis. The facility was formerly a premier producer in the floricultural market for America’s big-box national chains and has maintained the relationships and certifications to continue those business relationships for consideration of our national CBD product strategy. The facility has also secured various distributors, purchase orders and supply/off-take agreements for premium whole flower within the United States and CBD distillate internationally with an estimated value of over US$20 million.
RWB’s Massachusetts assets were developed initially by Tidal and now form part of the assets of the company as a result of closing the transaction. These assets consist of three cannabis licenses, two of which are for cultivation as well as a third license for processing and 2.8 acres of development land. RWB is looking at several strategic options for these assets for 2020.
RWB Stock Price Action & Chart
In its second trading session, shares of Red White & Bloom’s CSE listed RWB stock soared on Monday, closing the day up 28.42% at $1.22 per share. South of the border, RWB’s U.S. listed TDRYD shares closed the day at $0.91, up 13.65%.
Investor Research Links:
- CDN Listing | CSE: RWB
- U.S. Listing | OTC: TDRYD
- *U.S. symbol expected to change to from ‘TDRYD’ to ‘RWBYF’ in the coming days
- Website | IR Website | Investor Deck | RWB Email Alerts
Red White & Bloom is a paid client of The Cannabis Investor. The Cannabis Investor holds a position in RWB.
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