$42 million acquisition

US: "This makes us a multi-state operator with seven cultivation facilities"

Schwazze has closed the transaction to acquire Reynold Greenleaf & Associates, and the equity of Elemental Kitchen & Laboratories. As part of the transaction, the Company will also have a right to purchase or acquire cannabis licenses held by Medzen Services.,  and R. Greenleaf Organics, not-for-profit organizations that hold medical cannabis licenses in New Mexico.

Total consideration for the acquisition was $42 million (subject to potential working capital adjustments) with a potential performance based earnout. The consideration consists of $25 million in cash paid at closing and $17 million in a 3-year seller note at 5% interest.

Greenleaf is a licensed medical cannabis provider with ten dispensaries, four cultivation facilities – three operating and one in development – and one manufacturing location. The dispensaries are located in Albuquerque, Santa Fe, Roswell, Las Cruces, Grants and Las Vegas, New Mexico.  Greenleaf's approximately 70,000 square feet of cultivation as well as 6,000 square feet of manufacturing space are located in Albuquerque. The State of New Mexico currently allows medical cannabis and has approved adult use recreational cannabis sales which by law begin no later than April 2022. The New Mexico market is expected to grow approximately 300% in the next 5 years.

With this acquisition, Schwazze is now a multi-state operator ("MSO") with a total of 32 announced and acquired dispensaries, seven cultivation facilities and two manufacturing operations located in either Colorado or New Mexico. 

"With our regional expansion into New Mexico now complete, we have firmly graduated to the MSO category but with a differentiated regional focus which we and our stakeholders believe will be successful as we continue to position the Company for rapid expansion as the market opens for adult use consumption. We welcome the Greenleaf team to Schwazze, particularly Willie Ford who joins us in an advisory capacity, and are excited about our future together," stated Justin Dye, CEO & Chairman.

Willie Ford, Managing Director and Founder of Greenleaf added; "We are very excited to work with Schwazze given the depth of the team, their strong experience in retail and cannabis and their commitment to regional growth. This will be critical for us as New Mexico makes the move into legalization of cannabis for recreational use in April of this year."

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