Green Growth Brands is launching a new Ontario limited partnership, within which GGB will merge both its own operating companies and the issued and outstanding units of Moxie.
Moxie is a multistate operator (MSO) covering the California, Nevada, Arizona, Pennsylvania and New Jersey markets and its products are distributed in over 250 dispensaries across the United States.
The equity purchase price of the transaction is US $310 million, and will be satisfied through the issuance of either GGB Common Shares or Exchangeable LP Units.
The all-equity interest transaction will see GGB directly acquire shares of MXY C, INC. (MXY C) and MXY D, INC. (MXY D), Delaware entities within the Moxie structure, and interests in two entities, PurePenn LLC and Pure CA, LLC, with which Moxie has current acquisition agreements.
“In the short time since we began operations, we have built a business comprised of highly experienced management and merchant teams and cannabis experts, who have created successful CBD and MSO businesses. The coming together of Moxie and Green Growth Brands is anticipated to complete the circle,” said Peter Horvath, CEO of Green Growth Brands.
“As a ‘360 degree’ cannabis company, we expect to bring an expertise to each segment of the combined business: cannabis dispensaries, vertically-integrated and wholesale CBD and wholesale cannabis consumer products.”
“The coming together of Moxie and Green Growth Brands is anticipated to complete the circle.”
Peter Horvath, Green Growth Brands (pictured)
GGB is rapidly building its cannabidiol (CBD) business, including recently securing additional distribution through Designer Brands Inc., the parent company of DSW shoe stores (NYSE: DBI) and Abercrombie & Fitch Co. (NYSE: ANF), and is expanding its footprint of Seventh Sense Botanical Therapy shops from the current 61 to an expected 200+ by the end of calendar year 2019.
GGB is also building its MSO network, which now includes the potential for up to 47 dispensary licenses in three key states.
“The pairing between Moxie and Green Growth Brands is anticipated to accelerate growth for both businesses that results in a differentiated and expansive business model,” said Jordan Lams, Co-Founder and CEO of Moxie. “Moxie’s success comes from keeping our promise of delivering premium quality products to our consumers that creates an emotional connection with Moxie across multiple geographies. Both companies have proven track records of building customer loyalty through authenticity, and together, we are going to focus on taking steps to rapidly grow America’s mainstream cannabis brands.”
The transaction is structured to include the formation of GGB LP, a new Ontario limited partnership of which GGB will be the general partner, with the operating companies of GGB being placed under the partnership.
Payment of the Purchase Price will be satisfied through the issuance of common shares of GGB and exchangeable limited partnership units in GGB LP as follows:
- (i) through the issuance of GGB Common Shares to the shareholders of MXY C and MXY D;
- (ii) through the issuance of either GGB Common Shares or Exchangeable LP Units to the unitholders of Moxie; and
- (iii) through the issuance of Exchangeable LP Units to the holders of the Pure Entities. The Exchangeable LP Units are exchangeable into GGB Common Shares on a one-for-one basis for no additional consideration; however, the Exchangeable LP Units may not be exchanged for GGB Common Shares for the first year following the closing of the Transaction.
The closing of the transaction is expected to occur within the following six months, but remains subject to the satisfaction of various closing conditions, including receipt of all necessary regulatory approval for the transfer of the cannabis-related licenses of Moxie by local and state authorities in each of the markets where Moxie’s assets and licenses are held.
As part of the transaction, Moxie has agreed to make available a loan of US$5 million (the Loan) to GGB in order to fund certain pending acquisitions and the parties have agreed to enter into a distribution agreement.Cannabis Business Worldwide