Harvest Health and Recreation Inc (CSE:HARV) (OTCQX:HRVSF) is among the better-known cannabis firms in the United States, and on Tuesday, the company made a significant announcement.
Sells California Dispensaries to High Times Parent
The company announced that it is going to sell off its substantial number of dispensaries in California to a well-known operator in the cannabis industry. The buyer in question is Harvest and Hightimes Holding, and the company announced the deal in a separate press release. In the press release, it announced that it would pick up some equity and also acquire as many as 13 existing as well as planned dispensaries in California.
The acquired stores are going to be rebranded as High Times. Hightimes revealed that it is going to pay Harvest Health $5 million in cash to go along with a one-year promissory note worth $7.5 million at an interest rate of 10% and its series A preferred stock worth $67.5 million. In its own press release, Harvest Health stated that it is going to hold on to some dispensaries and the licenses for other locations in the state of California. The company did not provide any other details with regard to the deal.
The company’s has had some setbacks over the past year, and towards the end of 2019, its plans to acquire Verano and Falcon collapsed. These deals were designed to take the company to the next level. While the setbacks created a problem, it should be noted that Harvest Health is still on target to hit $50 million in sales in the quarter ending in June. The company has concentrated its presence in states like Arizona, Pennsylvania, and Florida. These states have made medical marijuana legal, and hence, if recreational cannabis is legalized, then the company will be able to capitalize straightaway. In Q4 2019, Harvest Health recorded sales of only $37.8 million, which worked out to year on year rise of only 14%.