Schwazze To Buy Colorado Cultivation Grower Brow 2 For $6.7M In Cash

Schwazze SHWZ, previously operating as Medicine Man Technologies, revealed Monday it has signed an agreement to acquire the assets of Brow 2, LLC, located in Denver, Colorado for $6.7 million in cash. The planned transaction includes a 37,000 square foot building (27,000 square feet of canopy) for indoor cultivation and equipment.

This transaction continues Schwazze's aggressive expansion in Colorado and will significantly enhance the Company's cultivation resources, providing product directly to its seventeen Star Buds brand dispensaries.

The acquisition is expected to close in the third quarter of 2021 after the Colorado Marijuana Enforcement Division and local licensing approval.

"We are looking forward to adding the Brow team to the growing Schwazze family,” Justin Dye, Schwazze's CEO stated. “This acquisition will add a talented team of growers, high-quality indoor flower cultivation capacity, new strain genetics, and another profitable asset to our platform. The new facility will supply our growing network of dispensaries and customers with a broad assortment of high-quality indoor flower.” 

Recent Milestones

• The Denver, Colorado-based cannabis company disclosed its financial results last week for the second quarter, reporting revenues of $30.7 million, up by 467% from the same quarter of 2020. Adjusted EBITDA of $10.0 million was 32.6% of revenue, 239 bps above Q1 2021, while net income was $4.4 million or $0.08 diluted earnings per share compared to a net loss in Q2 2020 of ($6.6) million or ($0.16) diluted net loss per share.

Shwazze also reiterated its 2021 guidance which excludes transactions that are announced but not closed. Annual revenue guidance is $110 million to $125 million and projected annual adjusted EBITDA from $30 million to $36 million.

• At the end of July, the company purchased Southern Colorado Growers in Huerfano County, Colorado for $11.3 million, including $5.9 million in cash and $5.4 million in stock. The acquisition boosted its footprint in Colorado by 34 acres of land, including outdoor cultivation capacity and indoor, greenhouse and hoop house cultivation facilities and equipment.

In addition to being the "first major move into cultivation," the purchase of SCG significantly expands Schwazze's presence in Colorado.

Price Action

Schwazze’s shares closed Monday market session 1.93% higher at $2.11 per share.

Photo: Courtesy of CRYSTALWEED cannabis on Unsplash