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Ventura Cannabis to Acquire Cannabis Dispensary in Oakland, California
LOS ANGELES, June 10, 2019 (GLOBE NEWSWIRE) — Ventura Cannabis and Wellness Corp. (“VCAN” or the “Company“) (CSE: VCAN) announced today that it has entered into a binding agreement to acquire a cannabis dispensary based in Oakland, California that specializes in delivery of cannabis to the entire Bay Area. The business is expected to generate $1,000,000 in annual revenue with EBITDA of $100,000, not including the revenues and profits generated from selling Ventura Cannabis branded product lines through the dispensary. The total combined cost, including all fees and expenses, of the transaction, is expected to be a cash outlay of $1,000,000 at closing. Additional payments of $375,000 cash and $295,000 stock will be paid over time depending upon performance. The management will retain operational control of the dispensary.
The dispensary will be added to the network of dispensaries in California that Ventura Cannabis has acquired, pending close. These dispensaries will act as a distribution network for the CannaSun brand and other in-house brands being actively developed.
As previously announced, Ventura Cannabis has signed a purchase agreement to acquire a vertically integrated business that recently launched a vape brand that it manufactures. At this time, the brand’s sales are limited to its local geographic area. The facility is currently producing cannabis vape products at less than an estimated 7% of capacity, or $750,000 annually.
The facility, at full production, which would require an additional capital expenditure of approximately $550,000, can produce an estimated $12 million in annual revenue with projected 50% gross margins at today’s market prices for vape products in California.
“We continue to build out our large California dispensary network with this agreement,” said Chris Heath, President of Ventura Cannabis. “This Oakland based company specializes in delivery around the Bay Area, and we see significant growth potential as we push our CannaSun product line, and other in-house brands currently in development, through their expanding customer base once we close. The CannaSun brand has yet not been marketed in the Bay Area, and we believe the next generation of CannaSun, and other in-house branded products will appeal to the key demographic of affluent and upwardly mobile Bay area professionals who seek discretion in the use of cannabis products. We continue to work through our large and growing pipeline of attractive acquisition targets. Our goal is to create the largest possible dispensary network in California for ourselves with the smallest cash outlay possible. As our pipeline grows, we continue to see better terms from sellers with healthy, scalable businesses. Our goal of exiting 2019 with a revenue run rate of $10 million annually is intact, and we are comfortable that we have the deal pipeline and balance sheet to achieve that goal.”
Closing of the acquisition is subject to a number of customary conditions, including receipt of all required regulatory approvals.
Additionally, Ventura Cannabis has decided to renegotiate the terms of the Remedy Purchase Agreement announced February 12, 2019 with the aim of reducing the total consideration paid, including the cash outlay. The Agreement has been terminated and the parties are working toward a revised Agreement.
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 the date of this release 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 VCAN’s ability to access private and public capital could be affected and or could not be available to support continuing operations.