CannaRoyalty Acquires FloraCal: CannaRoyalty (OTCMKTS:CNNRF) has announced today that it has closed its acquisition of FloraCal Farms, a licensed premium craft cannabis producer located in Sonoma County, California.
FloraCal produces an average of 1,000 kg of craft cannabis per annum and plans to expand that to 3,700 kg in its Phase II expansion and further to 5,500 kg in its phase III expansion.
In 2017 FloraCal generated a net income of $2.6 million USD.
CannaRoyalty Acquires FloraCal
CannaRoyalty is one of the largest cannabis distributors in the US. In its bid to become the biggest middleman in the Californian cannabis recreational market, It also acquired Rivers Distribution earlier in the year.
Afzal Hasan, President and General Counsel of CannaRoyalty said on the latest acquisition: "FloraCal occupies an ultra-premium position in the California market, with THC numbers testing up to 33% and a selling price of up to US$17.00 per gram. This demonstrates that even in a relatively mature flower market, craft branded flower is able to capture and maintain premium prices and margins."
FloraCal produces hand grown plants and practices sustainable cultivation techniques powered by 100% renewable energy. It specializes in "unique and rare genetics, currently encompassing seven ultra-high-quality cannabis flowers along with rosin and packaged pre-rolls."
Agreement
The transaction agreement states that CannaRoyalty has bought 100% of FloraCal for $1 million USD in cash along with 35,0088 CannaRoyalty shares as well as up to an additional $3 million USD in cash and a further 35,088 shares payable over 3 years, based on the completion of certain milestones, and other considerations.
In California, distribution is controlled by private companies such as CannaRoyalty. They are deemed to be the "gatekeepers" of that industry. Currently, demand for cannabis is outpacing supply.
“Distributors are really the gatekeepers of the whole system: state taxes are collected there, testing is done there,...If you’re looking at it from a business perspective, it’s a huge choke point in the system too because that’s really where supply has to go through.” said Hasan.
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CannaRoyalty acquiring FloraCal will ensure the producers place in the Californian market.
Featured Image: DepositPhotos.com/stokkete
