Rendering of a High Times Dispensary
Hightimes Holding Corp., owner of the eponymous magazine, entered a purchase agreement to buy 13 active and planned retail dispensaries from Harvest Health and Recreation, Inc. for $80 million in cash and stock, giving the company an almost instant foothold in California’s cannabis market.
High Times plans to take advantage of its expertise and brand – the most well known in the industry – to convert the Harvest locations into High Times shops, complete with the company’s logo and aesthetic theme.
The deal, which comes as High Times plans to list its shares on a national exchange, appears to be a savvy move while the country adjusts to the coronavirus shutdown. High Times’s famous Cannabis Cup events may be delayed while the government prohibits large gatherings but marijuana dispensaries are generally still functioning – if only for take-out or delivery orders.
“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.”
The dispensary acquisition also may help High Times continue with its recent pivot into a “People’s Choice Edition” of the Cannabis Cup, which takes place online rather than in person. The dispensary ownership makes it easy for High Times to handle large quantities of marijuana submitted for the contests and High Times could even sell winning strains in the new dispensaries.
The competitive landscape among dispensaries includes mom-and-pop shops along with listed companies such as MedMen Enterprises Inc., Medicine Man Technologies, Inc., and Terra Tech Corp. Even before the coronavirus struck, the dispensary industry was struggling with most share prices down sharply. MedMen shares, in particular, collapsed in recent months as it teetered toward bankruptcy and in late March it announced a funding package.
High Times, meanwhile, has sold public shares but they haven’t yet begun to trade. The company has over 27,000 investors who have subscribed to an offering of up to $50 million which remains open. Some of the shares sold have generated cash that won’t appear on the company’s balance sheet until the stock begins to trade.
The Harvest dispensaries will be part of a vertically integrated model High Times has developed through acquisitions. Last month, High Times said it would acquire California-based cannabis holding company Humboldt Heritage Inc. along with its subsidiaries Humboldt Sun Growers Guild and Grateful Eight LLC. The acquisition equips High Times with cannabis growing, processing and product manufacturing capabilities direct from the most coveted cannabis community in the world, Humboldt County.
Following the deal, which is mostly comprised of High Times stock, Harvest will become a significant shareholder in the business.
“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.”
John Jannarone, Editor-in-Chief