Under the deal, Cronos — whose higher-ups already have connections with PharmaCann — said a subsidiary had purchased an option to acquire around 10.5% of the U.S. company, which runs marijuana production facilities and dispensaries across six states.
The option, Cronos said, would be exercised based on various factors, “including the status of U.S. federal cannabis legalization, as well as regulatory approvals, including in the states where PharmaCann operates that may be required upon exercise.”
Cronos, in total, paid around $110.4 million for the option. Cronos deposited that money to a “third-party paying agent.”
PharmaCann runs six production facilities and 23 pot shops in New York, Illinois, Ohio, Maryland, Pennsylvania and Massachusetts. Once Cronos exercises the option, the two companies would be able to their products through each other’s distribution networks. The agreement would also give Cronos a board seat or board observer.
The announcement is the latest effort by a Canadian cannabis producer to reach the U.S.
Tilray (TLRY), before the merger with Aphria, bought Manitoba Harvest, which sells hemp granola and CBD products in America. And Aphria bought SweetWater, a beer company that is also in the U.S.
Meanwhile, Canopy Growth (CGC) has a deal in place to buy U.S. cannabis operator Acreage Holdings.
The U.S. also has seen legalization prospects increase, lifting marijuana stocks earlier this year.
“We were attracted to PharmaCann as an investment because of their disciplined capital allocation, strong track-record, and compelling licensed manufacturing and retail footprint,” Kurt Schmidt, Cronos’ CEO, said in a statement.
Links Between Marijuana Stocks
Cronos Group stock closed down 0.45% at 8.87 in the stock market today. Shares have a 34 Composite Rating and a 9 EPS Rating. Cronos’ market share in Canada has remained small. Among other marijuana stocks, Canopy Growth lost 2.8%. Tilray fell 3.7%. Aurora Cannabis (ACB) was down 1.5%.
Mike Gorenstein, Cronos’ current executive chairman and former CEO, and director Jason Adler hold an indirect interest in PharmaCann via their investment in a fund connected with Gotham Green Partners, a cannabis-focused private equity firm.
Gorenstein and Adler are… Continue reading at Investors.com