High Tide Inc., an Alberta-based, retail-focused cannabis corporation enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products, has entered into a binding asset purchase agreement (the “Agreement”) with Halo Labs Inc. (“Halo”), under which High Tide will sell its KushBar retail cannabis assets and the rights to 5 permitted retail cannabis stores (the “Portfolio”) to Halo for $12 Million, payable in the form of 46,153,846 common shares of Halo, of which $3.5 Million has been paid to High Tide as a non-refundable deposit, subject to certain limited circumstances (the “Transaction”). In addition, Halo has agreed to engage High Tide to substantially oversee all aspects of its retail cannabis operations with respect to the Portfolio and will pay High Tide ongoing royalties for regulatory advisory services and retail management, and a fixed fee for managing the construction of the unopened stores.
The Transaction follows on Halo and High Tide’s previous announcement of their strategic partnership in May of 2019. “Through the sale of KushBar under this transaction, High Tide simplifies its retail cannabis strategy to focus on Canna Cabana while adding another client for its evolving third-party retail store management business,” said Raj Grover, High Tide’s President & Chief Executive Officer. “We are excited to mark our strategic entry into the Canadian retail cannabis market with this initial portfolio of assets in Alberta. We look forward to strengthening our relationship with High Tide and benefitting from its expertise in retail store development and operations management,” added Kiran Sidhu, Chief Executive Officer of Halo. Following the closing of the Transaction, the Company will still hold 14 development permits on hand, which it expects to develop into Canna Cabana retail cannabis stores across Alberta in due course.
The Transaction is subject to the review and approval of Alberta Gaming, Liquor & Cannabis (“AGLC”) and is expected to close within 150 days. The Portfolio includes operating KushBar cannabis retail stores in Camrose and Morinville, a location nearing completion in Medicine Hat, as well as permitted retail cannabis store locations in Calgary, Edmonton, Edson and Fort McMurray.
The Company authorized the issuance of 3,600,000 shares to pay certain arm’s length third-party finders, all shares issued will be subject to a four month and one day statutory hold period.
Separately, on January 31, 2020, Alex Mackay, Chief Operating Officer, departed High Tide for family reasons. Since joining High Tide in February of 2019, Mr. Mackay was primarily responsible for the retail and wholesale operations of the Company. Going forward, Raj Grover, President & Chief Executive Officer, will oversee the Company’s operations with the assistance from David Evelyn, Senior Director of Operations.
High Tide is an Alberta-based, retail-focused cannabis company enhanced by the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products. It is a vertically-integrated company in the Canadian cannabis market, with portfolio subsidiaries including Canna Cabana Inc., KushBar Inc., Grasscity.com, Smoker’s Corner Ltd., RGR Canada Inc. and Famous Brandz Inc.