Columbia Care Cannabis Co. Acquires Medicine Man Denver For $42M In Cash And Stock

Columbia Care Inc. CCHW CCHWF (FSE:3LP) is acquiring vertically integrated cannabis company Medicine Man Denver.

The move comes months after Medicine Man’s termination of a term sheet agreement with Schwazze SHWZ last year after the Denver-based company, which previously did business as Medicine Man Technologies Inc., rebranded in April.

Deal Details: The New York-based company agreed to purchase Medicine Man for an upfront consideration of $42 million, including $8.4 million in cash and $33.6 million in stock.

The price tag represents a multiple of roughly 4.5x projected 2021 EBITDA.

Columbia Care opted for an additional payment in 2022 upon achievement of particular performance targets.

The company tapped Foley Hoag LLP to serve as legal advisors for the transaction.

Right Side Advisory Services agreed to serve as financial advisor to Medicine Man throughout the transaction, while Husch Blackwell LLP acted as its legal counsel.

The deal is expected to close in the fourth quarter of 2021.

What It Means For Columbia Care: The acquisition boosts the company’s cultivation and retail footprint by adding one cultivation facility and four dispensaries, including three recreational stores and one adult-use and medical retail location.

The cultivation facility spans 35,000 square feet and produces roughly three million grams of dried cannabis flower on an annual basis.

In addition, the acquired assets are immediately accretive to the company’s gross margin, Adjusted EBITDA and free cash flow.

“Medicine Man will further cement our position as the leading vertically integrated operator in Colorado, in tandem with our ongoing integration of The Green Solution, and will have a positive impact on our financial performance for years to come,” Nicholas Vita, CEO of Columbia Care, said Tuesday.

Columbia recently wrapped up the purchase of privately-held cannabis company Green Leaf Medical, LLC, in a $240 million stock and cash deal and launched Forage, a cannabis discovery tool developed to make product recommendations based on one's mood, activity and consumption preferences.

Sally Vander Veer, CEO of Medicine Man, called Columbia Care an “ideal partner” adding that this “opportunity was the right fit for our family and employees because of our shared commitment to operational excellence, emphasis on employees and culture and a customer-first mentality.”

Photo by Kimzy Nanney on Unsplash