Cannabis MSO Columbia Care To Acquire Colorado-Based Dispensary Chain For $140 Million
November 6th, 2019
Columbia Care, a significant company in the global cannabis industry with Multi-State Operator (MSO) licenses across the United States and Europe, will announce today the Company’s intent to acquire The Green Solution (TGS), a Colorado-based vertically integrated cannabis company, pending regulatory approval.
The combination of cannabis companies brings together cutting edge medical marijuana and adult-use capabilities. The acquisition will most likely elevate Columbia Care’s position as an operator in the $1.68B Colorado cannabis market. It will expand the Company’s footprint to 74 dispensaries and 19 cultivation/manufacturing facilities by the end of 2019.
Columbia Care has entered into a definitive agreement to acquire The Green Solution (“TGS”) through a stock and note transaction valued at approximately $140 million.
A crucial benefit of this transaction is that it will increase Columbia Care’s U.S. footprint to 93 facilities that are currently open or under development, including 74 dispensaries and 19 cultivation and manufacturing locations covering 15 jurisdictions. The proposed merger leverages TGS management’s expertise to ensure seamless integration and primes Columbia Care for success in adult-use markets.
“This is the first acquisition in Colorado by a publicly-traded MSO since the passage of House Bill 1090. We are excited to make history in the oldest legalized adult-use cannabis market in the country,” said Columbia Care CEO Nick Vita, exclusively to Sara Brittany Somerset for Forbes.
“This is the most intelligent and responsible use of Columbia Care’s capital today, and I’m proud of our team for having the patience, strategy, and discipline to structure this transformative deal in an otherwise depressed market,” Vita continues. “TGS has the largest footprint and strongest operations team in the state, and we look forward to leveraging their expertise throughout our operations nationally and abroad.”
In 2010, family-founded and operated business The Green Solution (TGS) was one of Colorado’s first dispensaries and the first Company to transition from medical to adult-use cannabis on the first day of state legalization.
TGS is now a prominent in-state cannabis brand with 21 locations throughout Colorado. The Company’s signature product line, Nectarbee™, offers over 50 strains of cannabis flower, as well as concentrates, edibles, drinks, tinctures, and topicals.
The transaction also includes the acquisition of Motaworks, a custom-built enterprise resource planning system that comprises a fully developed seed-to-sale inventory tracking, production management, and point-of-sale platform.
Additionally, the merger expands the Company’s Columbia National Credit (CNC) offering by coupling the nation’s first legal cannabis credit card with TGS’s successful loyalty rewards program.
TGS also operates one of the country’s largest-capacity, single-site manufacturing facilities, delivering over 225,000 units of highly curated products every month. TGS’s cultivation footprint encompasses three indoor grows totaling more than 250,000 sq ft.; One high-tech greenhouse over 16,000 sq ft., and 140 acres of outdoor cultivation space. These three sites combined are predicted to yield more than 48,000 pounds of cannabis flower in 2019, and nearly 150,000 pounds by 2023.
TGS completed over 1.4 million retail transactions in 2018 and reported audited revenue over $73 million on a trailing twelve-month basis, ending September 30, 2019.
Moreover, TGS has garnered numerous awards from cannabis competitions around the world, earning its place as a renowned heritage brand.
Since Columbia Care’s inception in 2012, the Company set out to distinguish itself from its competitors by focusing on organic growth, prioritizing cash flow.
Eric Speidell, Co-President of TGS, added, “Given the success and reputation we built over the last decade, we have been approached by nearly every serious operator in the cannabis industry about a potential acquisition. We are proud to have chosen Columbia Care, with its patient-centric, data-driven approach to health and wellness, as the ideal partner to trust with our family business. This deal allows us to provide Colorado consumers with Columbia Care’s unique portfolio of pharmaceutical-quality products, and it also enables us to expand our TGS brands into 15 new U.S. jurisdictions quickly.”
Kyle Speidell, Co-President of TGS agrees, “Additionally, we can now bring Columbia Care’s market-leading advancements, including its CNC credit card, home-delivery service and e-commerce capabilities to our customers in Colorado, further improving the concierge experience and the exceptional standards of customer service that we have worked so hard to establish. The structure of this transaction should clearly demonstrate how serious we are about using our insights and experience to ensure Columbia Care’s future success, and we are thrilled to have found the ideal partner as we head into our next stage of growth.”
Terms of the Agreement state that Columbia Care will purchase from sellers all equity interest in The Green Solution and all affiliates and subsidiaries.
Consideration of TGS of $140M includes $110M of Columbia Care stock, $15M in senior debt, and a $15M seller’s note with the potential for an additional milestone payment in 2021.
The transaction is subject to customary representations, warranties and covenants for transactions of this type.
Closing is subject to all required regulatory approvals, including, but not limited by, Hart Scott Rodino Antitrust Improvements Act (“HSR”), as well as Colorado state and municipal level approvals.
Following closing, stock-based consideration will be subject to an initial lockup period. The transaction is expected to close in 1H 2020, pending regulatory approval.
Conference call and webcast details: To access the live conference call via telephone, please dial 1-877-407-8914 (U.S. Callers) or 1-201-493-6795 (international callers), no passcode is required. A live audio webcast of the call will also be available in the Investor Relations section of the Company’s website. A replay of the webcast will be available in the Investor Relations section of the Company’s website approximately two hours after completion of the call and will be archived for 30 days.
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