Chalice Brands Ltd. Acquires Cannabliss & Co. retail chain from Acreage Holdings Inc., increasing its business footprint to 16 stores in Oregon
PORTLAND, Oregon, September 16, 2021 (GLOBE NEWSWIRE) – Chalice Brands Ltd. (CSE: CHAL) (OTCQB: CHALF) (“Chalice” or the “Company”), a leading consumer-focused cannabis company specializing in retail, production, processing, wholesale and distribution, has entered into an Asset Purchase Agreement and a Service Agreement effective September 16, 2021 (the “Agreement”) to acquire four retail stores under the Cannabliss & Co. brand from Acreage Holdings, Inc. (“Cannabliss ”), Located in Portland, Eugene and Springfield, Oregon for a total consideration of US $ 6.5 million (less excess working capital of US $ 500,000 to be left by the seller) or 0.8 times the annualized revenues for fiscal 2020. With the acquisition of Cannabliss, Chalice strengthens its customer base in the Oregon market, while significantly increasing its contribution to the vertical margin through the distribution of its Bald Peak Flower brand products, Chalice, Private Stash, RXO and Elysium Fields in the s Cannabliss stores. The closing of the transaction is subject to the approval of the OLCC (“Oregon Liquor and Cannabis Commission”) and the satisfaction of other closing conditions.
“This is a fantastic opportunity for Chalice to move closer to our goal of achieving our target market share in the State of Oregon while entering the Eugene market, and immediately enables the deployment of our Chalice products. in more stores. The addition of Cannabliss retail stores increases our footprint from twelve to sixteen stores, which represents an increase of nearly 130% in the retail footprint for this year alone. The Cannabliss team has done a tremendous job in Portland, Eugene and Springfield, Oregon, building historic businesses and a solid reputation for friendly customer service – exactly what Chalice looks for in a partner. We look forward to working with their team as we continue to expand our reach and increase product availability in the market, ”said Jeff Yapp, President and CEO of the Company.
Highlights of the transaction:
Under the terms of the Asset Purchase Agreement (“APA”), Chalice will acquire the assets of the four Cannabliss retail dispensaries for a total consideration of US $ 6.5 million, including a cash payment of US $ 250,000. Americans at the time of signing, offset by excess working capital. of US $ 500,000, plus a 10-month secured promissory note for US $ 6.25 million bearing interest of 6% for the first five months, 10% for the remaining five months, if necessary.
Under the terms of the service agreements, immediately after signing, Chalice commits to operating the retail stores, including staffing, pricing and purchasing, which enables Chalice to deploy its best sales management practices. world-class retail and immediately increase sales, net income and restore market share losses as well as optimize the contribution to the vertical margin.
Cannabliss lost market share and momentum during the COVID crisis, providing the opportunity to turn around performance under the leadership of Chalice’s management team and its retail expertise.
Oregon dispensaries include two in Portland, one in Eugene, and one in Springfield. Two of the stores are in buildings listed on the National Register of Historic Places – Sorority House in Eugene and Firestation 23 in Portland. The Firestation 23 location was the first adult dispensary to open in the city of Portland and was Oregon’s first medical marijuana dispensary.
Chalice’s business footprint grows from twelve to sixteen stores in Oregon, representing an increase of nearly 130% in the current fiscal year. Cannabliss is expected to market Chalice Brands’ products from the start of service agreements offering the potential to gradually increase total gross margins from around 42% to at least 52% in one year. Vertical sales of Chalice brand products are expected to represent approximately 25% of products sold within a year.
“This transaction structure demonstrates our disciplined approach to capital allocation, as we avoid dilution while increasing both our sales and profitability. The positive cash flow generated by this acquisition will partially fund the deferred payment, providing an immediate opportunity to increase shareholder value of Chalice. With the addition of these four retail assets, Chalice continues to solidify our leadership position in Oregon as we achieve our market share goals for 2021, ”said John Varghese, executive chairman of the company.
Chalice Brands Ltd.
Chalice is a leading consumer-focused production, processing, wholesale, distribution and retail cannabis company with twelve dispensaries in Portland, Oregon. The Company is committed to developing a dynamic portfolio built around the recognized brands of Chalice Farms, with a focus on health and wellness. Chalice operates nationwide through Fifth & Root and has operations in Oregon and California. Visit investors.chalicebrandsltd.com for regular updates.
Chalice Brands Ltd.
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Disclaimer: This press release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information includes, but is not limited to, statements regarding the future business operations of the Company, including the business operations, performance and funding of Cannabliss, including the business operations, performance and funding of Cannabliss. , opinions or beliefs of management and future business objectives. Generally, forward-looking information can be identified by the use of forward-looking terms such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “expected”. , “Estimates”, “” expects “,” intends “,” anticipates “or” does not anticipate “, or” believes “, or variations of these words and expressions or declares that certain actions, events or results “may”, “could”, “would”, “could” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors which may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by this forward-looking information. These risks include, but are not limited to, business, economic and competitive uncertainties, regulatory risks, market risks, risks inherent in manufacturing and retail operations such as unforeseen costs and production stoppages, difficulties in maintaining brand loyalty and other risks in the cannabis industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, other factors may cause results not to be as anticipated, estimated or planned. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Therefore, readers should not place undue reliance on forward-looking information. Forward-looking information is provided herein for the purpose of presenting information about management’s current expectations for the future and readers are cautioned that such information may not be appropriate for other purposes. The Company does not undertake to update forward-looking information, except in accordance with applicable securities laws. This press release does not constitute an offer to sell any securities in the United States, and such securities may not be offered or sold in the United States absent registration or an exemption from registration or authorization. exemption from registration.