US (VI): Cannabis company enters Virginia MMJ market with $16M investment

Jushi Holdings has signed definitive agreements to acquire the majority of the membership interests in Dalitso.

"Dalitso is currently one of only five applicants to receive conditional approval for a permit issued by the Virginia Board of Pharmacy to cultivate and process medical cannabis, and to dispense and deliver CBD oil and THC-A oil extracts in Virginia," the team with the company explains. "Dalitso’s conditional approval is for the northeast region of Virginia, and the Company is developing a facility in Prince William County near the City of Manassas."

Farzana Kennedy, RPh, FACA, President of Dalitso commented, “We are excited to have found such a fantastic operational and financing partner in Jushi. Dalitso remains committed to providing the highest quality medical cannabis products and patient care in Virginia. Jushi’s experienced leadership team and world-class operational expertise perfectly positions Dalitso to deliver on that commitment and serve its patients through the Commonwealth’s medical cannabis program.”

With a population of 8.5 million according to the U.S. Census Bureau, Virginia expanded its medical cannabis program in 2018, enabling more residents than ever before to purchase medical cannabis in a variety of formulas. Dalitso has received conditional approval to operate within the Virginia Board of Pharmacy-designated Health Service Area II, which includes two of Virginia’s most densely populated counties, Fairfax and Prince William, with 2.4 million people or 28.2% of the state’s total population according to World Population Review.

The aggregate purchase price for the approximately 62% of the membership interests in Dalitso, is approximately US$16 million, subject to working capital and other customary adjustments. The purchase price is payable as follows:

  • US$7.8 million in cash;
  • US$4.2 million in Subordinate Voting Shares of the Company (“Shares”) issued at an indicative price of US$2.00 per Share;
  • approximately 1 million warrants to purchase Shares at a purchase price of US$3.00 per Share, expiring two years from issuance (together with the Shares, the “Equity Consideration”); and
  • US$4.0 million in promissory notes comprised of (i) US$2.7 million in 6% secured notes issued to the sellers maturing after 24 months and convertible at the option of the holders on or prior to the maturity date into Shares at a conversion price of US$6.00 per Share, and (ii) US$1.3 million in 9% unsecured notes issued to certain sellers maturing after 24 months.

The Equity Consideration shall be issued subject to certain escrow provisions. As part of the transactions, the Company will also lend up to US$15 million to Dalitso in a 9% secured note to support the continued buildout, equipment purchases and other working capital needs (“Working Capital Facility”). The Working Capital Facility shall mature 48-months from initial issuance and shall be paid down upon Dalitso’s generation of free cash flow. Closing of the transactions, subject to regulatory and other customary closing conditions, is scheduled to be completed in the third quarter of 2019.

For more information:
Jushi
+1 (561) 617 9100
investors@jushico.com  
jushico.com  


Publication date:



Receive the daily newsletter in your email for free | Click here


Other news in this sector:


© MMJDaily.com 2019

Sign up for our daily Newsletter and stay up to date with all the latest news!

Subscribe I am already a subscriber