Popular Pot Publication High Times Agrees to Purchase California Dispensaries in $80 Million Deal
One of the most recognizable names in marijuana media is making an audacious pivot into cannabis retailing.
Los Angeles-based Hightimes Holding Corp., which owns the eponymous “High Times” magazine founded in 1974, yesterday announced plans to acquire more than a dozen existing and planned California cannabis dispensaries from Arizona-based multistate operator (MSO) Harvest Health & Recreation Inc.
The cash-and-stock deal is valued at $80 million and is expected to close in June.
Under the terms of the purchase agreement, Hightimes -- which also owns the Dope Magazine, Culture Magazine, Green Rush Daily and Cannabis Cup brands -- has agreed to pay $12.5 million in cash and $67.5 million in Series A preferred stock for the rights to as many as 15 dispensaries in California.
Founded in 2011, Harvest Health is one of the largest vertically-integrated MSOs in the country. It currently operates four retail cannabis stores in California, according to its website, and has operations in Arizona, Arkansas, Florida, Maryland, North Dakota and Pennsylvania.
Per a filing, it has agreed to transfer ownership of five of the 13 dispensaries and granted Hightimes the right to acquire another eight. Hightimes has also secured the ability to acquire two additional dispensaries.
According to the filing, Hightimes paid Harvest Health $1 million on April 27, 2020, and must pay an additional $4 million by June 9, 2020. The remaining $7.5 million has been guaranteed via a one-year promissory note with 10% interest.
In a press release, Hightimes executive chairman Adam Levin characterized Harvest Health as an industry trailblazer and expressed excitement for “ushering in the next generation of retail experience.”
“We’ve long supported Harvest and the other cannabis-retail-trailblazers as they pushed forward despite changing legislation, insurmountable licensing fees, political stigma and, frankly, through a process that was designed to be difficult,” he said.
Hightimes plans to “fully transform” the Harvest Health stores into “destination” dispensaries. The company also plans to overhaul the stores’ aesthetic and showcase its “iconic” red and white High Times logo in an effort to attract longtime cannabis users familiar with the publication.
In a separate release, Harvest Health CEO Steve White said the company had planned to divest California retail assets in an effort to “focus on optimizing operations and expanding assets in core markets such as Arizona, Florida, Maryland, and Pennsylvania.”
"We will continue to examine the strategic value of our assets and streamline operations as we move toward achieving our profitability goals,” he said.
The announcement comes about one month after Hightimes signed a letter of intent to acquire California-based Humboldt Heritage Inc., which manufactures, processes and distributes cannabis products.
In January, Hightimes hired former Overstock.com president Stormy Simon as its CEO as it prepared to pivot toward a plant-touching business model. Shortly thereafter, the company said it would launch retail outposts in Las Vegas and Los Angeles.
The deal with Harvest Health also comes as Hightimes is attempting to raise $50 million from both accredited and non-accredited investors via a regulation A+ IPO campaign that’s been active for nearly two years. As of press time, over 27,000 backers have made a minimum $550 investment, according to the Hightimes investor site.
Last month, Hightimes issued a press release saying it had raised over $20 million. It plans to list on the OTC Markets under the symbol “HTHC.”
Press releases with additional information on the Harvest Health deal are included below.
High Times Announces Acquisition of 13 California Retail Assets From Harvest
The World’s Most Recognized Cannabis Brand Expands Portfolio into the World’s Largest Cannabis Market
LOS ANGELES -- Hightimes Holding Corp., the owner of High Times®, the most well-known brand in cannabis, announced the execution of a definitive agreement to acquire certain equity and assets with respect to 13 planned and operational California dispensaries from Harvest Health & Recreation Inc. (CSE: HARV, OTCQX: HRVSF) (“Harvest”). The mostly stock-based transaction, upon successful closing, will allow Hightimes Holding Corp. to enter the retail sector and enable Hightimes Holdings to become one of the largest branded cannabis retailers in California overnight.
Hightimes Holdings intends to fully transform the cannabis retail stores to become High Times® destinations. Hightimes Holdings plans to revamp the existing design and rebrand each dispensary to fit the High Times® aesthetic and experience, rebranding them with the iconic High Times logo which consumers have grown to recognize over nearly five decades.
Consummation of the transaction is subject to certain closing conditions, including the receipt of certain regulatory third-party consents. The parties are aiming to close the acquisitions no later than June 30, 2020, subject to the parties’ mutual agreement to extend the closing date.
“We’ve long supported Harvest and the other cannabis-retail-trailblazers as they pushed forward despite changing legislation, insurmountable licensing fees, political stigma and, frankly, through a process that was designed to be difficult,” said Adam Levin, Hightimes Holding Corp.’s Executive Chairman. “We have enormous respect for the Harvest brand and look forward to ushering in the next generation of retail experience with Harvest as a significant shareholder in our company. We look forward to finding a myriad of ways to work with Steve and the team at Harvest.”
Harvest Health & Recreation Inc is a vertically integrated cannabis company and multi-state operator in the U.S. Since 2011, Harvest has been committed to expanding its retail and wholesale presence throughout the U.S., acquiring, manufacturing, and selling cannabis products for patients and consumers in addition to providing services to retail dispensaries.
“This transaction allows Harvest to invest in one of the most iconic brands in the industry,” said Steve White, Harvest’s Chief Executive Officer. “As one of the pioneers of the regulated cannabis ecosystem, we have always admired the work of High Times and are excited to watch the High Times brand flourish, as they poise themselves to enter the cannabis distribution and retail spaces.”
The deal comes in the final days of Hightimes Holding Corp.’s Regulation A+ IPO campaign. Investors interested in becoming a shareholder are encouraged to visit hightimesinvestor.com to view the High Times offering circular. You can also email email@example.com or call the brand’s investment hotline at 1 (833) BUY-HTHC (833-289-4842). View our latest Regulation A+ offering circular and our SEC filings.
About High Times:
For more than 45 years, High Times has been the world’s most well-known cannabis brand - championing the lifestyle and educating the masses on the benefits of this natural flower. From humble beginnings as a counterculture lifestyle publication, High Times has evolved into hosting industry-leading events like the Cannabis Cup and the High Times Business Summit, while providing digital TV and social networks, globally distributed merchandise, international licensing deals and providing content for its millions of fans and supporters across the globe. In the world of Cannabis, High Times is the arbiter of quality. For more information on High Times visit http://www.hightimes.com.
About Harvest Health & Recreation Inc.:
Headquartered in Tempe, Arizona, Harvest Health & Recreation Inc. is a vertically integrated cannabis company and multi-state operator (MSO). Since 2011, Harvest has been committed to expanding its retail and wholesale presence throughout the U.S., acquiring, manufacturing, and selling cannabis products for patients and consumers in addition to providing services to retail dispensaries. Through organic license wins, service agreements, and targeted acquisitions, Harvest has assembled an operational footprint with cultivation, manufacturing and retail locations spanning multiple states in the U.S. Harvest’s mission is to improve lives through the goodness of cannabis. We hope you’ll join us on our journey: https://harvesthoc.com.
Forward Looking Statements
This press release may contain information about Hightimes Holding Corp.’s view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to maintain and grow its business, variability of operating results, its development and introduction of new products and services, marketing and other business development initiatives, among other things. For further information about Hightimes, Hightimes encourages you to review its filings with the Securities and Exchange Commission, including its Form 1-A Offering Circular dated July 27, 2018, its Offering Circular supplement dated May 31, 2019, and all subsequent filings, including its Current Reports on Form 1-U, dated April 28, 2020.
Harvest Announces Planned Divestment of Select California Retail Assets to High Times
PHOENIX -- Harvest Health & Recreation Inc. (CSE: HARV) (OTCQX: HRVSF) ("Harvest"), a vertically integrated cannabis company and multi-state operator (MSO) in the U.S., today announced plans to divest select retail assets in California to Hightimes Holding Corp. ("High Times"). Harvest and its affiliates intend to sell a portfolio of equity and assets with respect to 13 operational and planned dispensaries in California for total consideration including up to $5 million in cash, $7.5 million as a one-year promissory note with 10% interest, and $67.5 million in Series A Preferred Stock issued by High Times. Harvest will retain select retail dispensaries and licenses for potential retail locations in California following completion of this transaction.
"This planned divestment of select retail assets in California allows Harvest to focus on optimizing operations and expanding assets in core markets such as Arizona, Florida, Maryland, and Pennsylvania while retaining a smaller retail presence in California" said Chief Executive Officer Steve White. "We will continue to examine the strategic value of our assets and streamline operations as we move toward achieving our profitability goals."
The transaction is expected to close by June 30, 2020 subject to various closing conditions and contingencies including regulatory approvals and availability of capital consideration. Assets may be excluded from the divestment plan if required approvals are not obtained resulting in an adjustment to the total consideration.
About Harvest Health & Recreation Inc.
Headquartered in Tempe, Arizona, Harvest Health & Recreation Inc. is a vertically integrated cannabis company and multi-state operator (MSO). Since 2011, Harvest has been committed to expanding its retail and wholesale presence throughout the U.S., acquiring, manufacturing, and selling cannabis products for patients and consumers in addition to providing services to retail dispensaries. Through organic license wins, service agreements, and targeted acquisitions, Harvest has assembled an operational footprint with cultivation, manufacturing and retail locations spanning multiple states in the U.S. Harvest's mission is to improve lives through the goodness of cannabis. We hope you'll join us on our journey: https://harvesthoc.com
This press release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of Harvest with respect to future business activities. 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 regarding: (i) expectations regarding the size of the U.S. cannabis market, (ii) the ability of the Company to successfully achieve its business objectives, (iii) plans for expansion of Harvest, and (iv) expectations for other economic, business, and/or competitive factors.
Investors are cautioned that forward-looking information is not based on historical facts but instead reflects Harvest management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although Harvest believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined Company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the ability of Harvest to open additional retail locations and meet its revenue growth and profitability objectives, the ability of Harvest to integrate recent acquisitions, the ability of Harvest to obtain and/or maintain licenses or other contractual rights to operate in the jurisdictions in which it operates or in which it expects or plans to operate; changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of Harvest to raise debt and equity capital in the amounts needed and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that Harvest operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws, including those related to taxation; and increasing costs of compliance with extensive government regulation. This forward-looking information may be affected by risks and uncertainties in the business of Harvest and market conditions.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although Harvest has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Harvest does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.