Green Thumb Raises $217 Million, Announces Plan to Acquire Virginia's Dharma Pharma

Green Thumb Industries

Fresh off securing $217 million in debt financing, Chicago-based Green Thumb Industries announced Monday plans to enter the Virginia cannabis market via the acquisition of Dharma Pharmaceuticals.

Specific financial details were not disclosed, however the deal is expected to close in the second half of 2021.

According to a news release, the purchase includes an existing production facility and retail dispensary located in Abingdon, Virginia. Green Thumb will also be able to open five additional retail locations across the state.

Dharma is one only five licensed medical operators in Virginia that is permitted to grow, process and sell cannabis directly to consumers. That’s important because under Virginia’s recently approved adult-use cannabis legislation, new licensees will not be allowed to vertically integrate.

However, existing medical marijuana operators will be able to obtain multiple adult-use licenses if they pay a $1 million fee to the Virginia Cannabis Equity Loan Fund and the Virginia Cannabis Equity Reinvestment Fund, and if they submit plans for diversity, equity, and inclusion.

“This industry will create consequential economic opportunities and social change in a part of the country that remains void of legal access to cannabis today,” Green Thumb CEO Ben Kovler said via the release. “We look forward to serving Virginia’s current medical patients, and future adult-use consumers, while supporting the tremendous positive impact that the legal cannabis industry can have on local communities.”

Recreational cannabis sales are not expected to begin in Virginia until January 1, 2024, however possession will be made legal on July 1, 2021.

According to the announcement, Dharma was the first medical marijuana operator to provide products to patients in 2020.

Roughly 8.6 million people call Virginia home, according to the United States Census Bureau. The state’s legal cannabis market could reach $1.5 billion in sales, Green Thumb said.

“Change is happening,” Kovler said. “We are seeing sweeping cannabis reform across the country in favor of expanded access.”

When the deal closes, Green Thumb will have a presence in 13 U.S. states.

The acquisition comes just days after the cannabis firm raised $217 million in debt financing at an interest rate of 7%. Roughly $105 million will be used to retire existing senior secured debt, due in May of 2023, and the remainder will be used for “general working capital purposes as well as various growth initiatives.”

“History has taught us that the winners in new industries are those with the lowest cost of capital and the strongest balance sheets,” Kovler said in a separate release.

The notes will mature on April 30, 2024, and Green Thumb also secured the ability to borrow an additional $33 million over the next 12 months.

More details are available in the releases below.

Green Thumb Industries Enters Virginia Cannabis Market

  • Signs definitive agreement to acquire one of five vertical licenses in Virginia, which includes an operating production facility and retail location
  • Transaction facilitates strategic expansion into the first adult-use market in the Southeast U.S.
  • Expands national cannabis distribution footprint to 13 states

CHICAGO and VANCOUVER, British Columbia, May 03, 2021 (GLOBE NEWSWIRE) -- Green Thumb Industries Inc. (“Green Thumb”) (CSE: GTII) (OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner of Rise™ Dispensaries, today announced it has signed a definitive agreement to acquire 100% of Dharma Pharmaceuticals LLC (“Dharma”), expanding its cannabis distribution network into the Virginia cannabis market (the “Acquisition”).

Dharma was the first operator to provide medical products to Virginia’s patients in 2020 and is strategically positioned to scale in the emerging adult-use market. Virginia became the first Southeastern state in the United States to legalize adult-use cannabis after the Virginia General Assembly approved legislation on April 7, 2021. This follows several post-election legalization initiatives at the state level, including New York in March and New Mexico in April, bringing the total to 17 states and 3 U.S. territories with legal and regulated cannabis programs for adult use, or over 40% of the U.S. population. While Virginia currently allows cannabis access only to qualified medical patients, adult-use sales are expected to commence in January 2024. With a population of nearly 8.5 million, Virginia is expected to generate over $1.5 billion in legal cannabis sales, create significant tax revenue for the Commonwealth and employ thousands of Virginians.

“Change is happening. We are seeing sweeping cannabis reform across the country in favor of expanded access. This momentum has finally reached the first state south of the Mason-Dixon line to ratify adult-use cannabis sales and we are excited to work with the Dharma team in Virginia,” said Green Thumb Founder and Chief Executive Officer Ben Kovler. “This industry will create consequential economic opportunities and social change in a part of the country that remains void of legal access to cannabis today. We look forward to serving Virginia’s current medical patients, and future adult-use consumers, while supporting the tremendous positive impact that the legal cannabis industry can have on local communities.”

Mr. Kovler added, “We will continue to execute on our ‘enter, open, scale’ strategy to expand our production capabilities to improve access to Green Thumb’s branded products and retail experiences for both medical patients and consumers across the country.”

Kevin Gibbs, Partner and Head of Operations of Merida Capital Holdings, which is the current majority-equity owner of Dharma, added, “Over the past two years our team has worked hard to introduce the first medical cannabis products to Virginia’s patients. Together with Green Thumb, Dharma’s offering will expand to prepare for the introduction of adult use sales in the first market in the Southeastern United States.”

Upon completion of the Acquisition, Green Thumb will have a presence in 13 markets: California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New York, Ohio, Pennsylvania and Virginia. As one of only five licenses in the Virginia medical cannabis market, Dharma is licensed to grow, process and retail cannabis directly to consumers. The Acquisition includes an existing production facility and retail dispensary located in Abingdon, VA. Green Thumb will also maintain the opportunity to open up to five additional retail locations in the Commonwealth.

Completion of the Acquisition is subject to customary regulatory approvals and is expected to close in the second half of 2021.

About Green Thumb Industries:

Green Thumb Industries Inc. (“Green Thumb”), a national cannabis consumer packaged goods company and retailer, promotes well-being through the power of cannabis while giving back to the communities in which it serves. Green Thumb manufactures and distributes a portfolio of branded cannabis products including Beboe, Dogwalkers, Dr. Solomon’s, incredibles, Rythm and The Feel Collection. The company also owns and operates rapidly growing national retail cannabis stores called Rise™. Headquartered in Chicago, Illinois, Green Thumb has 13 manufacturing facilities, licenses for 97 retail locations and operations across 12 U.S. markets. Established in 2014, Green Thumb employs over 2,400 people and serves thousands of patients and customers each year. The company was named a Best Workplace 2018 by Crain’s Chicago Business and MG Retailer magazine in 2018 and 2019. More information is available at www.GTIgrows.com.

Green Thumb Industries Announces US $217 Million Senior Debt Financing

  • Secures Additional Funding at Industry Leading Interest Rate of 7%
  • Retires Existing Senior Secured Debt due May 2023
  • Low-Cost Capital Strengthens Balance Sheet to Accelerate U.S. Expansion Strategy

CHICAGO and VANCOUVER, British Columbia, April 30, 2021 (GLOBE NEWSWIRE) -- Green Thumb Industries Inc. (“Green Thumb” or the “Company”) (CSE: GTII) (OTCQX: GTBIF), a leading national cannabis consumer packaged goods company and owner of Rise™ Dispensaries, today announced the Company has closed on a US $217 million senior non-brokered private placement financing through the issuance of senior secured notes (the “Notes”). The Company intends to use the proceeds to retire the Company’s existing US $105 million senior secured debt due May 2023 and for general working capital purposes as well as various growth initiatives.

“History has taught us that the winners in new industries are those with the lowest cost of capital and the strongest balance sheets,” said GTI Founder and CEO Ben Kovler. “Our successful non-brokered offering (gross=net) was supported by members of the management team in addition to a diverse group of new and existing high-quality, institutional investors who share in our strategic vision and plan to capitalize on the opportunities ahead. This financing represents industry-leading cost of capital in the legal cannabis industry and strengthens our balance sheet. This new capital will allow us to focus on shareholder value creation through strategic investments to scale our existing operations in addition to accretive M&A opportunities.”

The Notes have a maturity date of April 30, 2024 and will bear interest from the date of issue at 7% per annum, payable quarterly, with an option, at the discretion of the Company, to extend an additional 12 months. The financing permits the Company to borrow an additional US $33 million over the next twelve months. The purchasers of the Notes also received an aggregate of 1,459,043 warrants (the “Warrants”). Each Warrant is exercisable to purchase one subordinate voting share of GTI at an exercise price of US $32.68 per share, for a period of 60 months from the date of issue.

Certain insiders participated in the financing, purchasing an aggregate of approximately US $3 million of Notes. Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), such insider participation is a “related party transaction.” The Company is exempt from certain requirements of MI 61-101 in connection with the insider participation in reliance on sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the aggregate value of the insider participation does not exceed 25% of the market capitalization of the Company. Further details will be included in the Company’s material change report to be filed within the prescribed time. Such material change report was not filed more than 21 days prior to closing of the financing due to the timing of the announcement and closing occurring in less than 21 days.

About Green Thumb Industries:

Green Thumb, a national cannabis consumer packaged goods company and retailer, promotes well-being through the power of cannabis while giving back to the communities in which it serves. Green Thumb manufactures and distributes a portfolio of branded cannabis products including Beboe, Dogwalkers, Dr. Solomon’s, incredibles, Rythm and The Feel Collection. The company also owns and operates rapidly growing national retail cannabis stores called Rise™. Headquartered in Chicago, Illinois, Green Thumb has 13 manufacturing facilities, licenses for 97 retail locations and operations across 12 U.S. markets. Established in 2014, Green Thumb employs over 2,400 people and serves thousands of patients and customers each year. The company was named a Best Workplace 2018 by Crain’s Chicago Business and MG Retailer magazine in 2018 and 2019. More information is available at www.GTIgrows.com.

Cautionary Note Regarding Forward-Looking Information 

This press release contains statements which may constitute “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, or similar expressions and include information relating to the use of proceeds from the financing, plans to capitalize on future opportunities and the scaling of the Company’s existing operations in addition to accretive M&A opportunities.

The forward‐looking information in this news release is based upon the expectations of future events which management believes to be reasonable. Any forward‐looking information speaks only as of the date on which it is made, and, except as required by law, Green Thumb does not undertake any obligation to update or revise any forward‐looking information, whether as a result of new information, future events or otherwise. The forward‐looking information in this news release is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those express or implied. When considering these forward‐looking statements, readers should keep in mind the risk factors and other cautionary statements in Green Thumb’s public filings with the applicable securities regulatory authorities on the SEC’s website at www.sec.gov and on SEDAR at www.sedar.com.


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