Cannabis One Holdings Inc. (CSE:CBIS) (OTC:CAAOF) has added another brand to its portfolio by closing a definitive agreement with Green Lady IP Inc. Green Lady provides infrastructure services to two cannabis dispensaries in Olympia, Washington, and a third one not far away in Lynnwood, Washington.
The Denver-based Cannabis One purchased Green Lady for $3,050,000 USD divided between cash upfront, deferred payable installments, and Class "B" super voting shares in the company. The deal includes the option for Green Lady to purchase all of the assets from the dispensary companies themselves, including those related to cannabis licenses and the sale of regulated products, at the cost of another $3,200,000 USD. This aspect of the transaction is pending regulatory changes in Washington that would allow out-of-state ownership of the assets held by the dispensaries.
In a press release, company CEO Jeffery Mascio said, "By coupling our progressive infrastructure services program with an option to purchase the underlying licensed assets upon a change in WSLCB regulations, Cannabis One has developed a creative and accretive framework through which it may continue to pursue its exciting Pacific Northwest expansion program."
Washington State is Primed for Growth
The purchase provides Cannabis One with a number of important inroads into Washington State's cannabis market, which is considered "vibrant, yet relatively isolated." Michael Redman, Green Lady IP owner, calls it, "perhaps one of the most compelling, but often-overlooked, cannabis markets for out-of-state industry participants."
This is primarily because the cannabis industry in Washington is highly regulated compared to some of the state's neighbors, like Oregon and British Columbia. The state government currently prohibits out-of-state ownership of licensed assets, though there is an expectation that these types of jurisdictional regulations will gradually be reduced. One reason the state has for easing restrictions on the cannabis sector is that, last year, the Washington State Liquor & Cannabis Board reported a $362 million profit in Washington from cannabis tax revenue. That's an increase of $48.3 million from 2017.
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Cannabis One plans on using Green Lady to explore new collaborations with other cannabis companies in the state as the cannabis market there continues to grow. In addition, Redman will be bringing his experience to the Cannabis One management team.
"Green Lady believes Cannabis One's forward-thinking approach to the diversification of its operations – away from simply focusing on licensed ownership – to additionally focus on intellectual property management, brand power, and now infrastructure services, breaks the Washington mould to provide the competitive advantage necessary to challenge local incumbents," said Redman.
Cannabis One Expands on the West Coast and Beyond
Washington lies in the heart of the Pacific Northwest, sometimes called the Cascadia Region. As of late, Cannabis One Holdings has been making a concerted effort to control a significant portion of the cannabis market in that area. In May, the company secured two manufacturing and process facilities in Oregon and began production of both CBD and THC infused products.
Last month, it provided a corporate update and announced that its licensed partner had commenced production of Honu brand concentrates in Washington. At that time, pre-orders and sales data indicated that the brand should generate approximately $850,000 USD per year in annualized brand manufacturing contract fee revenue.
Cannabis One is quickly making a name for itself as a "House of Brands" for the North American cannabis market. By utilizing existing industry relationships between cultivators, retailers, and brand manufacturers, it seeks to redefine the traditional, vertically-integrated, seed-to-sale business model. The company's current brands include INDVR, a premium line of vaporizers, and The Joint, an award-winning cannabis dispensary in Denver. Through the end of 2019, Cannabis One plans to extend The Joint brand to twenty-five retails locations spread across the states of Colorado, Washington, California, Nevada, and Oregon.
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