High Tide Cannabis Co. Is Buying Online Retailer DankStop For $3.85M

Cannabis retailer High Tide Inc. HITI HITI 2LYA is poised to purchase DS Distribution Inc., which operates as DankStop.com, for US$3.85 million.

Transaction Details: Under the deal between High Tide USA Inc., a wholly-owned U.S. subsidiary of the Calgary-based cannabis company and the online retailer High Tide have agreed to pay the sum by issuing its common shares.

Once the acquisition closes, DankStop will have roughly $100,000 in cash and non-cash working capital and an inventory of around $220,000. In addition, the Delaware-based company will continue to operate as a wholly-owned subsidiary of High Tide USA Inc.

What It Means For High Tide: The acquisition provides High Tide access to DankStop's 

over 200,000 email subscribers and approximately 335,000 Instagram followers.

DankStop co-founder Feliks Khaykin and director Gabe Aronovich will join the High Tide team, with Khaykin taking on the role of director of U.S. operations and Aronovich coming on as director of U.S. business development once the deal is wrapped up.

Aronovich said he is "truly excited" to team up with High Tide.

"The synthesis of High Tide's expansive e-commerce and manufacturing capabilities with DankStop's vast subscriber base and social media presence will solidify High Tide's position as the global leader in the online consumption accessory market, and I could not be more delighted to be part of the High Tide family," Aronovich said Tuesday.

The boards of directors of both parties approved the transaction, which is immediately accretive since DankStop generated revenue in excess of US$3 million over the 12 months ended April 30, 2021, with an EBITDA margin in the "low double digits," the company disclosed.

High Tide's Recent Moves

The move follows High Tide's recent announcement that it is acquiring 100% interest in DHC Supply LLC operating as Daily High Club, an online retailer of glass water pipes, vaporizers and other consumption accessories, for $10 million in stock and cash. The company's portfolio currently includes 3 out of the top 5 most popular e-commerce platforms for consumption accessories, including Grasscity, Daily High Club, and SmokeCartel, which was purchased for $8 million in March.

Photo by Esteban Lopez on Unsplash