Cannabis company Schwazze SHWZ has closed the acquisition of the first six out of 13 Star Buds Colorado retail locations for around $37.1 million.
Back in June, Schwazze signed definitive agreements to purchase all 13 Start Buds locations in Colorado, and one cultivation center. The company projects to obtain the other seven locations in the first quarter of the following year.
Star Buds is a retail cannabis operator in the U.S. offering a diverse portfolio of cannabis products, such as strains, edibles, concentrates, and tinctures.
These six dispensaries that were first acquired are located in Commerce City, Niwot, Pueblo, Pueblo West, Denver, and Longmont. Its collective pro-forma revenue for this year is estimated to reach around $24 million, and EBITDA to be around 36% of revenue.
The price tag includes $13.9 million in cash, $13.9 million in a seller’s note, and $9.3 million in preferred stock, with a price of $1,000 per share.
Schwazze, previously running under the name Medicine Man Technologies Inc., will fund the purchase through a five-year, $5 million convertible promissory note payable to Dye Capital & Company LLC and $9.45 million in proceeds from a securities purchase agreement with Dye Capital & Co. managed fund.
“Star Buds is a premier cannabis industry brand and we are excited to be bringing the first six of 13 Colorado locations into the Schwazze family,” Schwazze CEO Justin Dye said in a statement. “Led by Brian Ruden, TJ Joudeh and their partners, Star Buds has built a respected, innovative and most trusted retail operation. I greatly admire its commitment to high quality products and its budtenders’ commitment to customers and cannabis expertise."
Dye says the addition of these six Star Buds dispensaries expands Schwazze's retail operations footprint, builds on its "customer-centric focus" and enables the company to reach positive cash flow beginning in January.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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