Ventura Cannabis and Wellness Corp. Enters Process for Utah Licensing; Accelerates Disposition of Rehab Assets
LOS ANGELES, October 10, 2019(Global Newswire) –Ventura Cannabis and Wellness Corp. (CSE:VCAN) (“Ventura” or the “Company”) announces it has identified and is pursuing a large opportunity in the state of Utah.
The Company will also accelerate the disposition of all of its rehab assets, both those under binding purchase agreements with earn outs and those under master service agreements.
The plan to accelerate the disposition of the rehab assets is expected to bring in an estimated $3.5m in cash. This cash is expected to come in over the next two quarters more quickly than previously announced, longer term earn out style payments. The result will be higher than anticipated increases in cash over the next two quarters and the total elimination of rehab revenues within the next quarter.
The Utah Opportunity
The state of Utah has recently voted to award only 14 retail cannabis pharmacy licenses for the entire state. The Company plans to pursue being awarded one of these licenses. The Ventura management team took part in a public forum with state officials to seek input on streamlining the process. (https://www.sltrib.com/news/politics/2019/09/17/utah-lawmakers-vote-take/)
Acceleration of Disposition of Rehab Assets
The Company intends to dispose of all its rehab assets within the next two quarters, with plans to discontinue revenues by the end of the current quarter as follows:
- A non-binding agreement to sell Hollywood Detox, which holds the assets, including the real estate, for the in-patient Los Angeles Unit, has been reached. The sale price is $2,128,000 of which $675,000 will be paid upon closing and the remainder will come mostly from accounts receivable collections expected within the next three months.
- On January 28, 2019, the company announced the sale of a subsidiary, BLVD Centers, Inc. Under the purchase agreement, the buyer, who is also the operator for the entity including the Sawtelle center, agreed to staggered payment terms while they operate the facility and finalize the acquisition. The location was recently searched by authorities. Ventura is working to finalize the disposition of this subsidiary. Management cannot project net proceeds from liquidation.
- The Portland Unit will be disposed of with an expected net increase of $85,000 in cash over the next 4 months as well as a potential payment of up to $25,000 depending on certain factors.
- The Highland Unit and the San Diego Unit have been disposed of already and those proceeds are reflected in cash.
- All of the Corona, California Units are expected to bring proceeds of $930,000 once the real estate is sold.
“Now that we know our return metrics on acquiring cannabis assets are highly favorable, we want to quickly reduce distractions from the rehab business. The effect of this decision is that we will eliminate revenues from rehab, and we can be judged clearly as only a cannabis company,” continued Mr. Heath. “We expect we will collect an additional $3.5m in cash in a very short period of time, increasing our cash balance significantly. In doing this, we accomplish many goals in one move: We reduce credit risk from being paid earn outs and payments by the licensee operators, as well as saving costs associated with regulatory and law enforcement issues that seem to arise with these operators, and we build our balance sheet in the case Utah regulators need to feel confident we can execute on the license if granted.”
For more information contact:
Ventura Cannabis and Wellness Corp.
Certain statements contained in this presentation constitute “forward-looking information” as such term is defined in applicable Canadian securities legislation. The words “may”, “would”, “could”, “should”, “potential”, “will”, “seek”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, “confident” and similar expressions as they relate to the Company. Such statements reflect the Company’s current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties, and assumptions. The forward-looking information included are made as of October 10, 2019, and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. VCAN holds or is acquiring marijuana assets in the United States. Previously disclosed acquisitions are still subject to closing. Marijuana is legal in each state VCAN is looking to operate, however marijuana remains illegal under US federal law, and the approach to enforcement of US federal law against marijuana is subject to change. Shareholders and investors need to be aware that adverse enforcement actions could affect their investments and that the Company’s ability to access private and public capital could be affected and or could not be available to support continuing operations.