- Once complete, the acquisition will add 2 retail locations in Colorado and 3 in Oregon, bring on a seasoned retail team, and create vertical integration in Colorado.
- Upon closing, consolidated revenue is expected to triple. The Company expects to be cash flow positive as all retail locations open and ramp.
- Total consideration for the transaction is $39.5 million, payable 13% in cash and 87% in stock.
- General Cannabis is expanding its convertible debt round to fund the cash required at the closing of the transaction.
- General Cannabis will change its corporate name to Trees.
DENVER, April 21, 2021 (GLOBE NEWSWIRE) -- General Cannabis Corp (OTCQB: CANN) today announced that it has entered into a definitive agreement to acquire Trees, a leading cannabis retail operator with dispensaries in Colorado and Oregon. The transaction, which is subject to regulatory approval, will provide the Company with a foundational retail platform from which to expand growth.
The transaction is the latest milestone for General Cannabis, a Colorado-based company whose strategy is to identify, acquire and operate licensed cannabis facilities in mature markets. Over the last year, General Cannabis became one of the first public companies to receive a Suitability Approval from the Colorado Marijuana Enforcement Division to acquire licensed cannabis assets, acquired and integrated SevenFive Farm (a 17,000 square foot light deprivation greenhouse outside of Boulder, CO), strengthened its Board and management team and completed a series of capital transactions which bolstered its balance sheet and added working and growth capital. In addition to SevenFive Farm, the Company operates Next Big Crop, a subsidiary that provides design, consulting and operational services to cannabis cultivation facilities throughout the country. Total revenue for General Cannabis nearly doubled in 2020 from 2019.
Trees currently operates a dispensary in Denver, Colorado and two dispensaries in Portland, Oregon. Revenue for the three existing stores was approximately $18 million in 2020. In the coming months, Trees anticipates opening one additional dispensary in Denver and one in Portland, which would bring its total dispensary count to 5 locations. The addition of the Trees footprint will make General Cannabis vertically integrated in Colorado.
Carl Williams, Chairman of the Board of General Cannabis, said, “This is a transformational acquisition for us. Over the past year, we have strengthened our team and our balance sheet to be able to capitalize on an opportunity like this. When we close this transaction, we anticipate that our consolidated revenue will at least triple. We expect to become cash flow positive from operations as all stores open and ramp. Equally important, we instantly develop a retail foundation and add personnel with deep retail experience.”
When the transaction closes, the senior leadership of Trees will become an important part of the General Cannabis team. Tim Brown, the founder and CEO of Trees, will become a member of General Cannabis’s Board of Directors and join the executive management team. Trevor Hoffman, co-founder and President of Trees, will also join the executive team. General Cannabis will change its name to Trees as soon after the closing as practicable, though it will retain its trading symbol CANN.
Steve Gutterman, CEO of General Cannabis, said, “Today’s announcement represents a massive step forward in executing on our rollup strategy. In acquiring Trees, we are adding a retail platform that is successful today and will be the backbone of future growth. Tim, Trevor and the Trees team bring incredible depth and know-how. They deeply and passionately care about their customers. And the name ‘Trees,’ which suggests health and growth and nature and, of course, cannabis – and has a passionate fan base – is a perfect representation of our combined vision.”
General Cannabis will acquire Trees for approximately $39.5 million of total consideration, or 2.2 times Trees’s 2020 revenue. Approximately 13%, of this consideration will be paid in cash over 24 months and 87% will be paid with General Cannabis common stock. The Company will issue 38,745,193 shares to Trees shareholders upon closing; the number of shares is calculated by dividing the stock consideration by $0.89 per share, the 15-day volume weighted average price from March 24th – April 14th.
To pay the cash at closing, the Company has expanded its convertible debt round by $2.3 million, to an aggregate of $6.9 million. In total, the Company has raised approximately $10 million over the past nine months. These funds have and will be used to strengthen the Company’s balance sheet and provide capital for growth opportunities like this acquisition.
Trees CEO Tim Brown said, “Everything we do, we do for our customers and without them – and our amazing employees – we wouldn’t be here today. We are excited to join the team because General Cannabis shares our values and our vision. This transaction will allow us to grow – our way. We are excited to bring Trees to more customers and to continue to build a business that is by weed people for weed people.”
About General Cannabis Corp
General Cannabis Corp is a Colorado-based cannabis company with deep expertise in wholesale and retail operations as well as cultivation consulting. The Company is pursuing a rollup strategy of cannabis assets in mature markets. The Company's website address is www.generalcann.com.
Forward-looking Statements
This press release contains “forward-looking statements” within the meaning of applicable securities laws. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”, and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements are not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances. Although General Cannabis Corp believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, caution must be exercised in relying on forward-looking statements because General Cannabis Corp can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these statements. Forward-looking statements are subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking statements. Such risks and uncertainties include, but are not limited to, current and future market conditions; the expected or potential impact of the COVID-19 pandemic on General Cannabis Corp’s business operations, financial results and position, as well as world economy and volatility, risks related to federal, state, local and foreign government laws, rules and regulations, including changes in the regulation of medical and recreational cannabis use; as well as those risks and uncertainties discussed from time to time in General Cannabis Corp’s most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q under the heading "Risk Factors" and in subsequent filings with the Securities and Exchange Commission. The statements in this press release are made as of the date of this release. General Cannabis Corp undertakes no duty to update any forward-looking statements made herein.
Contact:
Steve Gutterman
sgutterman@generalcann.com