Delta 9 Cannabis (TSX: DN) announced late this evening that it would be expanding its retail cannabis operation. The firm entered a binding letter of intent with Modern Leaf Group to acquire two proposed retail locations in the Province of Alberta.
The announcement from Delta 9 means that they are now expanding beyond the borders of their home province of Manitoba. Previously, the firm had four operating retail locations in addition to its grow facility. Those locations however were confined to Manitoba, with two in the City of Winnipeg, one in Brandon, and the other up north in Thompson. With the most recent acquisition, the firm will now be diversified to other Western Canadian provinces.
While not included within the release, based on our research the two retail locations are based in Calgary and Grand Prairie. While the Calgary location appears to be located near Old Downtown, the Grand Prairie storefront is located in the heart of suburbia within a strip mall.
The proposed acquisition of these additional cannabis stores continues our strategy of establishing a chain of Delta 9 branded retail stores across Canada. Following completion of this acquisition we will have a total of six operating retail stores in Western Canada and we are actively looking to increase this number as quickly as possible.
John Arbuthnot, founder and CEO of Delta 9
The total purchase price for the two locations comes in at $1.3 million, demonstrating the falling value of retail licenses in Alberta, where storefronts total more than the rest of Canada combined. The price is in stark comparison to Tilray Inc’s purchase only weeks ago at a price of roughly $5.0 million per license. The sale is to consist of $1.0 million in Delta 9 stock at a price per share of $0.80. The remainder will be paid in cash, with the first $150,000 installment being paid immediately as a non-refundable deposit. The final $150,000 cash payment will occur at the close of the transaction.
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The proposed transaction is anticipated to close by November 30, 2019.
Information for this briefing was found via Sedar and Delta 9 Cannabis. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
