Green Growth Brands might be at the center of a will-they-won’t-they hostile takeover tussle with Aphria right now – but elsewhere, it’s business as usual.
Toronto-HQ’d GGB has inked a definitive agreement to fully acquire ZLJT LLC & Arizona Natural Pain Solutions Inc, better known as Desert Rose.
Green Growth is paying US$12.35m (C$16.3m) in cash to seal the buyout.
Why? Desert Rose holds a license for a vertically-integrated operation in Arizona, including retail, cultivation and infusion (kitchen).
“We were very impressed with the quality of the operations held by Arizona Natural Pain Solutions,” said Green Growth Brands CEO Peter Horvath.
“At Desert Rose, the team is dedicated to providing their customers with medical marijuana products that are pure, safe, and efficient while striving to keep their costs as affordable as possible. This strategy fits perfectly with our plans to grow the world’s premier cannabis retailing business.”
Desert Rose, located on the corner of 7th Ave and Happy Valley Road, close to the Norterra shopping center, was founded in August 2016 and has grown to serve nearly 400 patients per day.
Desert Rose specializes in flower, vape pens, concentrates, edibles and tinctures. It also offers a loyalty program where customers earn back 1% of their purchases to be spent in the dispensary.
“The retail operations at Desert Rose fits our stated strategy of favoring large sales volume with high-productivity assets,” added Horvath.
“Our vision of Green Growth Brands is to be a multi-state operator with stores averaging USD$15 million to USD$20 million in annual sales, driven by per square foot sales in excess of USD$10,000. This is what our first assets in Nevada and this store in Arizona have achieved.”
“The retail operations at Desert Rose fits our stated strategy of favoring large sales volume with high-productivity assets.”
Peter Horvath, Green Growth Brands (pictured)
The state of Arizona currently restricts cannabis consumption for medical use but appears to be moving towards legalizing recreational use.
According to the Arizona Department of Health Services, marijuana sales in the state reached almost 122,000 pounds in 2018, a 41% increase over 2017, with over 186,000 registered medical marijuana patients as of December 2018.
Completion of the acquisition is expected to occur in February 2019 and remains subject to regulatory approval, customary conditions of closing and the satisfactory completion of due diligence by the Company.
The Desert Rose transaction further expands Green Growth Brands position as a multi-state operator (MSO), with Arizona representing the third U.S. state in which GGB will have a marijuana-related operations.
GGB previously announced in December 2018 its entry into the Massachusetts cannabis market via the execution of a definitive agreement to acquire 100% of the membership interests of Just Healthy LLC, and later that same month it confirmed the expansion of operations and the awarding of additional licenses in Nevada.
GGB has now announced the completion of the Just Healthy buyout.
Pursuant to the terms of the Just Healthy membership interest purchase agreement, Green Growth issued 1,480,057 common shares of GGB at a price of CAD$2.88 per Common Share (representing a 15% discount to the closing market price on the Canadian Securities Exchange on December 11, 2018.
GGB has also assumed and satisfied USD$455,000 (CAD$569,933) of Just Healthy corporate debt.Cannabis Business Worldwide