High Times Again Extends Public Offering, Announces Cannabis Delivery Service Acquisition
High Times' crowdfunding efforts may have stalled, but its dealmaking capabilities are moving ahead expeditiously as the popular pot publication continues its pivot toward a plant-touching business model.
The magazine's parent company, Hightimes Holding Corp., has inked a deal for Sacramento, California-based marijuana delivery service Mountain High Recreation, Inc.
The mostly stock-based transaction -- which was valued at $2.8 million and included only $100,000 in cash -- is expected to close before October.
The deal is pending approval from the California Bureau of Cannabis Control, as well as the city of Sacramento and Hightimes’ senior secured lender, according to a filing.
“There is no assurance that we will be successful in obtaining such approval or otherwise consummating the Mountain High acquisition,” Hightimes noted in its filing.
If successful, Hightimes will trade 245,455 common shares (2.7 million shares following an 11-for-1 split) and pay Mountain High stockholders Chelsea and Kenneth Cordoba as much as $200,000 in royalty payments.
The pair will also receive two-year employment contracts that pay $125,000 annually and include options to purchase 385,000 additional shares of Hightimes common stock.
"Chelsea and Ken Cordoba and their Mountain High Team bring years of experience providing high quality cannabis delivery to California and they truly know their customers and how best to please them," Hightimes CEO Peter Horvath said in a news release. "Together we are launching High Times delivery in California where we will bring the best assortment of quality cannabis products to your doorstep safe, and fast, with exceptional value."
The Los Angeles-based media company, which has struck a number of retail-minded deals this year, said the purchase would give it “cannabis distribution infrastructure and personnel” before the first rebranded High Times dispensary opens its doors.
“This year our team is expanding to include two important sets of consumer experts – successful local cannabis operators who possess a level of customer intimacy you won’t find in large multi-store operations, paired with accomplished retail professionals who have led and built some of the most successful multi-billion dollar brands in retail,” Horvath said.
According to the release, Hightimes will acquire “distribution depots servicing the Northern and Southern California markets” upon the closing of the transaction.
Hightimes has repeatedly maintained that it planned to launch a delivery service in previous press announcements.
“Delivery has always been part of our plan for how you will shop our stores,” Hightimes president Paul Henderson said. “Customers are agnostic about where they complete the transaction.”
In recent months, Hightimes has made a number of moves aimed at repositioning the company as a trusted producer and seller of cannabis products.
The company has also said it would spend a combined $500,000 and trade 15 million shares of common stock for two cannabis stores in Northern California.
“We’re in the process of transferring ownership of 5 operating stores and 7 new stores across the California market, and we wouldn’t think of servicing that audience without a superb delivery solution in the equation,” Henderson said via the release.
In early June, the company closed a nearly $26 million licensing arrangement with Toronto-based Red White & Bloom Brands (RWB), which will turn 18 planned and operational marijuana dispensaries throughout Michigan, Illinois and Florida into High Times-branded stores.
Despite the flurry of successful M&A activity, a deal for California-based cannabis cultivator Humboldt Heritage Inc. recently fell through and Hightimes has struggled to drum up interest for a $50 million regulation A+ IPO campaign that’s been active for two years.
The offering deadline was once again extended until September 30, 2020, as the company continues its pursuit of selling more than 4.5 million shares of common stock.
Recall that Horvath, who was appointed CEO in May, will see his annual salary bumped from $100,000 to $400,000 if he can bring in another $20 million. The minimum investment from both accredited and non-accredited investors is $550, and the company has raised more than $20 million from more than 30,000 backers to date.