July 8, 2019
Jamie Blundell, President & COO is pleased to provide the following update on Jushi, one of CGOC’s public holdings:
Jushi Holdings Inc. (NEO: JUSHI.B) (“Jushi”), one of CGOC’s private portfolio holdings that recently went public, announced two acquisitions that execute on their that it has signed a definitive agreement to acquire its first operational adult-use and medicinal dispensary in San Diego, California, and has signed definitive agreements to acquire the majority of the membership interests in Dalitso LLC (“Dalitso“), located in Virginia.
California has nearly 40 million residents and the longest-running medical cannabis program in the country. San Diego is the second largest city in California with a population of approximately 1.4 million and over 35 million visitors each year. San Diego is also a limited license market with a maximum of 36 total retail cannabis licenses divided among 9 council districts. To date, 19 retail cannabis licenses have been issued in the city, 17 of which are operational.
Jushi has signed a definitive agreement to purchase seventy-five percent (75%) equity and voting interest in the San Diego dispensary, subject to working capital and other customary adjustments. The purchase price is approximately US$12 million, of which 50% is paid in cash and 50% is paid by way of issuance of certain 8% secured notes (the “Notes”) to the sellers maturing after 18 months, and convertible at the option of the holders on or prior to the maturity date into Subordinate Voting Shares of the Company (the “Shares”), at a conversion price based on a specified historical volume weighted average trading price of the Shares on the NEO exchange, subject to a minimum of US$2.30 and a maximum of US$2.875 per Share. The Notes will be issued subject to certain escrow provisions. Closing of the transaction is subject to regulatory and other customary closing conditions and is scheduled to be completed in the third or fourth quarter of 2019.
With a population of 8.5 million according to the U.S. Census Bureau, Virginia expanded its medical cannabis program in 2018, enabling more residents than ever before to purchase medical cannabis in a variety of formulas. Dalitso has received conditional approval to operate within the Virginia Board of Pharmacy-designated Health Service Area II, which includes two of Virginia’s most densely populated counties, Fairfax and Prince William, with 2.4 million people or 28.2% of the state’s total population according to World Population Review. Dalitso is currently one of only five applicants to receive conditional approval for a permit issued by the Virginia Board of Pharmacy to cultivate and process medical cannabis, and to dispense and deliver CBD oil and THC-A oil extracts in Virginia. Dalitso’s conditional approval is for the northeast region of Virginia, and the Company is developing a facility in Prince William County near the City of Manassas.
The aggregate purchase price for the approximately 62% of the membership interests in Dalitso, is approximately US$16 million, subject to working capital and other customary adjustments. The purchase price is payable as follows: US$7.8 million in cash; US$4.2 million in Subordinate Voting Shares of the Company (“Shares”) issued at an indicative price of US$2.00 per Share; approximately 1 million warrants to purchase Shares at a purchase price of US$3.00 per Share, expiring two years from issuance (together with the Shares, the “Equity Consideration”); and US$4.0 million in promissory notes comprised of (i) US$2.7 million in 6% secured notes issued to the sellers maturing after 24 months and convertible at the option of the holders on or prior to the maturity date into Shares at a conversion price of US$6.00 per Share, and (ii) US$1.3 million in 9% unsecured notes issued to certain sellers maturing after 24 months.
Jushi and its industry leading management team is building an integrated multi-state owner and operator of cannabis and hemp licenses across the United States. Jushi is focused on continuing to build a diverse multi-state portfolio of branded cannabis and hemp-derived assets through opportunistic investments and by internally pursuing licenses in attractive jurisdictions. Jushi strives to maximize shareholder value while delivering high quality products across all levels of the cannabis and hemp ecosystem.
For more information, please visit jushico.com.
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For further information please contact Cannabis Growth Opportunity Corporation: