Inner Spirit Holdings Announces Expansion Program for Spiritleaf Retail Cannabis Stores in Ontario Market

Published: March 10, 2020

Inner Spirit Holdings Announces Expansion Program for Spiritleaf Retail Cannabis Stores in Ontario Market

Inner Spirit Holdings Ltd., a Canadian company establishing a national network of retail cannabis stores under its Spiritleaf brand,  has added an investment from Prairie Merchant Corporation (“Prairie Merchant“), submitted (along with its franchise partners) applications to the Alcohol and Gaming Commission of Ontario (“AGCO“) for 24 Retail Store Authorizations (“RSAs“) for Spiritleaf franchised and corporate-owned store locations in Ontario, and entered into an agreement to acquire the Kingston, Ontario Spiritleaf-branded store from its current owner.

“We are planning to effectively pursue growth in the Ontario market. We have developed a brand and franchise model that generates a strong customer following in local communities and can move efficiently into new markets,” said Darren Bondar, President and CEO of Inner Spirit. “The additional investment and support from well-known cannabis investor W. Brett Wilson will enable us to extend our Spiritleaf network into Ontario with franchised and corporate-owned locations just as we have done in AlbertaBritish Columbia and Saskatchewan. We expect to grow our footprint in Ontario using the same skills, dedication and focus we bring to our other markets in Canada. Our corporate store expansion in Ontario got a jumpstart today as we entered into an agreement to purchase the Kingston Spiritleaf store which had been opened and operated by an Ontario lottery winner.”

STRATEGIC INVESTOR — PRAIRIE MERCHANT CORPORATION

The investment by Prairie Merchant, a company controlled by W. Brett Wilson, was comprised of (a) a private placement offering (the “Offering“) by the Company to Prairie Merchant of 6,000,000 common shares of the Company (“Common Shares“), at a price per Common Share of $0.10, for aggregate gross proceeds of $600,000; and (b) purchase by Prairie Merchant of another 6,000,000 Common Shares from a licensed producer (a “LP“). The Common Shares issued under the Offering are subject to a four month hold period in accordance with applicable securities laws. Funds will be used to build additional corporate stores in Ontario and for general working capital purposes. Following completion of the transactions, Prairie Merchant now owns over 12,000,000 Common Shares, representing approximately 5.4% of the issued and outstanding Common Shares.

Additionally, a number of the Company’s LP shareholders have cancelled or agreed to cancel an aggregate of 15,441,177 outstanding Common Share purchase warrants that effectively reduces the ownership of the Company by LPs to less than 25%. This strategic action enables the Company to be eligible to apply for a Retail Operator Licence (“ROL“) and to submit applications for RSAs for corporate-owned Spiritleaf retail cannabis stores throughout Ontario.

APPLICATIONS FOR RETAIL STORE AUTHORIZATIONS IN ONTARIO

The Company, along with its franchisees, have submitted applications for RSAs for 24 new retail cannabis store locations in Ontario with AGCO. A majority of the applications are for franchised locations, with six corporate-owned stores being proposed or available for sale to local franchise partners. The Company believes these locations represent some of the best-quality real estate options available in the province.

Franchises:

Woodview Place, Burlington          

Wellington West, Ottawa      

Lawrence Avenue, Don Mills

Bloor West Village, Toronto

Queen Street West, Toronto

Scarborough, Toronto

St. Clair, Toronto

Cabbagetown, Toronto 

Little Italy, Toronto

Masonville Place, London 

Balsam Street, Collingwood

King Street, Hamilton

Edinburgh Marketplace, Guelph

Village Plaza, Waterdown   

Hog’s Back Plaza, Ottawa

Stitsville, Ottawa

Taunton Square, Oshawa

Regency Plaza, Stratford

 

Corporate-owned (or available to local franchise partners):

Robertson Centre, Ottawa

Cataraqui Centre, Kingston     

Fairway Centre, Kitchener

Wellington Southdale, London 

Ambassador Plaza, Windsor

Grantham Plaza, St. Catharines

“The majority of our planned locations in Ontario will be franchise owned which fits with our business model. We also believe the benefits of franchising are well aligned with the policy objectives of the Ontario government in crafting their retail cannabis laws, namely to support and protect small business. We are a company entirely focused on small business owners serving their local communities with the best retail recreational cannabis experience possible,” said Bondar.

Franchise opportunities are currently available across Ontario and prospective cannabis retail operators who have applied or received their ROL are invited to learn more about Spiritleaf and apply at https://innerspiritholdings.com/franchise/.

ACQUISITION – KINGSTON SPIRITLEAF STORE

On March 6, 2020, the Company entered into a binding asset purchase agreement to acquire the existing Kingston Spiritleaf-branded store currently being operated under a retail agreement with an Ontario lottery winner and ROL holder (the “Transaction“). The consideration payable under the Transaction is anticipated to equal $277,618.67 plus the value of any inventory and prepaid amounts, and is to be paid substantially by set-off against outstanding indebtedness owed by the licensee to the Company. The Transaction is subject to various customary covenants and conditions, including a condition to the benefit of the Company that it obtains an ROL and an RSA from the AGCO in respect of the store.

It is anticipated the store will be corporate-owned effective May 1, 2020 once covenants and conditions are satisfied. The store opened on April 1, 2019 and was one of the first in Ontario from the first wave of lottery winners to do so. It has generated more than $7 million in retail sales in its first 11 months of operations.

The Spiritleaf retail cannabis store network currently includes 46 open and operating franchised, licensed and corporate-owned stores in AlbertaBritish ColumbiaSaskatchewan and Ontario. Please visit www.spiritleaf.ca for further information on store locations, operating hours and future opening dates.

Inner Spirit Holdings Ltd. has established a growing network of recreational cannabis stores across Canada under its Spiritleaf brand. The Spiritleaf network includes franchised and corporate-owned stores as well as an Ontario retail partnership, all operated with an entrepreneurial spirit and with the goal of creating deep and lasting ties within their local communities.