Cannex Capital Holdings Inc CNXXF said on Monday it will enter the CBD market through the acquisition of San Diego, California-based Pure Ratio Holdings, a company focused on holistic wellness products based on hemp-derived CBD.
What Happened
The transaction will be conducted in cash and stock, with a total value of $8 million. Cannex said it will pay Pure Ratios shareholders up to $2 million in cash, 3.5 million shares of its stock and $2.5 million in contingent cash consideration. Cannex will also assume $500,000 of Pure Ratio debt.
Upon closing, Cannex will pay $1.4 million and an additional $100,000 every month for six months, according to Monday's announcement.
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Why It's Important
The acquisition expands Cannex's brand portfolio with new CBD and wellness brands. Pure Ratios' portfolio includes a variety of CBD products, including a transdermal patch.
Pure Ratios' products combine hemp-derived CBD with traditional Chinese medicines. They are distributed through a network of holistic and naturopathic medicine practitioners and in over 300 health food stores and online across the U.S.
Canada-based Cannex Capital provides a range of real estate, management, financial, branding, intellectual property and other services to cannabis businesses. The company is focused on indoor cultivation, extraction, manufacturing and branding of edible and derivative products, and retail operations. Aside from the acquisition of Pure Ratios, Cannex is also in the process of completing its merger with 4Front Holdings, which was announced in November.
What's Next
The transaction is subject to a number of conditions. Aside from purchasing Pure Ratio, Cannex Capital also plans to offer a loan of up to $1.5 million to Accucanna, a 90-percent-owned subsdiary of Pure Ratio which owns a soon-to-be-opened cannabis dispensary in Desert Hot Springs.
The loan will be issued through a secured note with 10-percent interest for six months and 18-percent interest until it matures, according to Cannex.
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