Green Growth Brands (CSE: GGB) put out a filing through the Canadian Securities Exchange late last night, wherein they indicated that they had signed a definitive agreement to purchase a Florida licensed operator. The firm, Spring Oaks Greenhouses, and Green Growth signed the deal yesterday, on June 3, 2019.
The total aggregate purchase price for the transaction is set at US$54,650,000, which will be partially paid in cash and shares. In total, US$26,150,000 is to be paid in cash, while 7,289,146 common shares of Green Growth will be issued to satisfy US$17,100,000 of the purchase price. Finally, a convertible promissory note to the tune of US$11,400,000 will cover the remainder of the acquisition.
The convertible promissory note will have a term of 12 months, and has a minimum convert price per share equal to the greater of:
- (i) USD$5.00 and
- (ii) the closing market price of the Issuer common share on the CSE on the trading day immediately prior to the Maturity Date, less fifteen percent (15%).
Spring Oaks Greenhouses recently received its license to operate as a cannabis nursery in the state of Florida as the result of a lawsuit which saw a total of 8 new licenses granted. After the awarding of these licenses in April, there are now 22 operators in the coveted state of Florida.
The firm is based out of Umatilla, Florida based on all the information we could find. Umatilla is roughly an hours drive from both Daytona Beach, as well as Orlando, Florida. The firm appears to be outdated in terms of its online presence, with no website and an outdated Facebook page.
The acquisition is significant news for Green Growth, who has struggled to increase its dispensary footprint for its cannabis operations. Florida legislation requires that nurseries handle all verticals of the cannabis market. This means that cultivation, processing, manufacturing, and distribution is to be managed by a single company. As a result, Green Growth Brands is now able to open up to thirty five dispensaries across the state, however it is only able to sell what it can produce. Previously limited to oils only, the market recently opened up to dried flower as well.
While Green Growth Brands has finally obtained a coveted Florida cannabis firm, known as a Medical Marijuana Treatment Center, the loser in this transaction is undoubtedly Liberty Health Sciences (CSE: LHS). There had long been speculation that the Florida operator would be bought out by Green Growth, fueled primarily by the financial backers involved in both public companies.
Liberty Health is primarily backed by the Serruya family, whereas the Schottenstein family is the financial backer of Green Growth. Both were involved in a joint Ohio application to obtain several cannabis licenses. Last fall, the Liberty Health-Schottenstein joint venture was awarded a processor license within the state. As such, speculation has long existed that Green Growth Brands would eventually scoop up all assets of Liberty Health. As a result of this transaction, that clearly is not the motive, putting speculation to rest.
Green Growth Brands closed at $3.16 in yesterdays session, down $0.54, or -14.59%.
Information for this briefing was found via The CSE and Green Growth Brands. 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.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.