KELOWNA–Fiore Cannabis Ltd. (CSE: FIOR) (OTCQX: FIORF), a licensed multi-state cannabis cultivator, producer and retailer, today announced it has signed a Letter of Intent to purchase California Patients Club, a cannabis delivery company operating in the state of California, for US$1.2 million payable in a stock and cash transaction. The delivery business will further integrate Fiore’s service offering in California where the Company operates the Green Leaf Wellness cannabis retail store in Desert Hot Springs in the Coachella Valley.
The acquisition is primarily being funded with Fiore shares at a valuation that will be determined at closing. The shares will be locked up for an initial six months and then released in equal parts quarterly over three years using an agreed-upon release mechanism. The acquisition is expected to close in 90 days.
“There is such energy and excitement in the Coachella Valley for the cannabis industry. Our dispensary there is doing significant business serving recreational and medical customers, primarily in person. With regulations in California supportive of cannabis delivery, we see the opportunity to enter the delivery business, tie it to our growing retail business, and generate additional revenues for the Company,” said Erik Anderson, President and CEO of Fiore Cannabis.
CPC is one of the top cannabis delivery services in the state with annual sales of US$2.2 million and a strategic focus to this point on northern California markets. By aligning with Fiore, CPC owner John Jacobs and his operations team see the opportunity to extend their e-commerce business and delivery services to include southern California markets such as the Coachella Valley.
“We have developed a top-tier cannabis delivery and e-commerce business with a solid customer base,” said John Jacobs, Owner of California Patients Club. “We think we have the scale and the ability to grow our business beyond our current markets and aligning with Fiore is going to enable us to do just that. We want to be recognized as the best and most reliable delivery business throughout the state of California and this takes us one step closer to realizing that objective.”
Anderson expects the acquisition to include synergies in sales and operations for Fiore’s California operations. “We can apply CPC’s technology, footprint and distribution capability to new markets and further leverage our own retail operations to serve additional consumers in the state,” said Anderson.
The California cannabis market topped US$4.4. billion in sales in 2020 according to Marijuana Business Daily. Markets such as California are also seeing significant increases in demand this year as COVID-19 restrictions continue to improve across the U.S.
This news release contains forward-looking statements or information that relate to our current expectations and views of future events, including in respect of to the proposal to complete the acquisition of CPC and associated transactions, including statements regarding the terms and conditions of the acquisition, expected closing date of the acquisition, the business plans and objectives of Fiore and CPC following the acquisition and expectations for other economic, business and competitive factors associated with the acquisition and approval of regulatory bodies. Statements which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, outlook, expectations or intentions regarding the future including words or phrases such as “anticipate”, “objective”, “may”, “will”, “might”, “should”, “could”, “can”, “intend”, “expect”, “believe”, “estimate”, “predict”, “potential”, “plan”, “is designed to”, “project”, “continue”, or similar expressions suggest future outcomes or the negative thereof or similar variations. These forward-looking statements are based on the Company’s current projections and expectations about future events and financial trends that management believes might affect its financial condition, results of operations, business strategy and financial needs, and on certain assumptions and analysis made by the Company in light of the experience and perception of historical trends, current conditions and expected future developments and other factors management believes are appropriate.
Forward-looking information and statements involve and are subject to assumptions and known and unknown risks, uncertainties, and other factors which may cause actual events, results, performance, or achievements of the Company to be materially different from future events, results, performance, and achievements expressed or implied by forward-looking information and statements herein. Such factors include, among others: the risks and uncertainties identified in the Company’s reports and filings with the applicable Canadian securities regulators, the risks that the parties will not proceed with the acquisition or will not proceed as described herein; the terms and conditions of the acquisition and associated transactions will differ from those that are currently contemplated; that Fiore will not experience operational or financial synergies from the acquisition on the terms contemplated or at all; that the business of CPC does not grow to anticipated levels in the near or long term; the risk that the acquisition will not be viewed as favorable to the investment community and the risk that the acquisition and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). Although the Company believes that any forward-looking information and statements herein are reasonable, in light of the use of assumptions and the significant risks and uncertainties inherent in such information and statements, there can be no assurance that any such forward-looking information and statements will prove to be accurate, and accordingly readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance upon such forward-looking information and statements. Any forward-looking information and statements herein are made as of the date hereof, and except as required by applicable laws, the Company assumes no obligation and disclaims any intention to update or revise any forward-looking information and statements herein or to update the reasons that actual events or results could or do differ from those projected in any forward-looking information and statements herein, whether as a result of new information, future events or results, or otherwise.
(This information is primarily sourced from Fiore. Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).