LGC Capital Ltd. has entered into a formal definitive agreement to acquire 47% of EasyJoint Project SRL, an Italian company, for a total cash and share consideration of €4.788 million (C$7.153 million at today’s exchange rate of 1 EUR = 1.494 CAD). Definitive documentation will now be submitted to the TSX Venture Exchange and closing of this transaction is subject only to TSXV review and approval.
EasyJoint currently controls approximately 85% of the distribution of legal “cannabis light” retail products in Italy and has established itself as the leading brand in Italy. EasyJoint products are distributed in over 450 retail points of sale in Italy and rapidly expanding beyond current specialty stores to EasyJoint branded franchise stores. Eleven EasyJoint franchise stores have already opened in Rome, Milan, Piacenza, Rovato (BS), Viadana, Bassano del Grappa, Crotone, Pantelleria, and Parma with an additional two stores under discussion.
The company has also been successful at penetrating the very large licensed tobacco network in Italy. EasyJoint products consist of over 150 branded items ranging from high-CBD dry cannabis flowers to CBD oils and edibles. Through LGC’s network of strategic investments, EasyJoint will expand its brand presence into new global markets, including legal cannabis markets across Europe, North America, and the Caribbean.
For the 10 months prior to October 31, 2018, unaudited revenues have grown to over €4 million (C$6 million) with margins of 19.7%, which will increase as EasyJoint achieves economies of scale through expansion. EasyJoint’s revenue channels split approximately 75% through retail with the remaining 25% of revenues through e-commerce.
EasyJoint is led by its Co-founder and CEO, Mr. Luca Marola, who has been an early advocate of the Italian anti-prohibitionist movement in favor of the legalization and normalization of the use of cannabis in Italy. Mr. Marola has actively participated in cannabis related discussions in the Italian and European Parliaments and has made multiple interventions at the Italian Parliament, which have impacted the laws that passed in recent years. Mr. Marola is the founder of one of the oldest Italian grow shops, “Canapaio Ducale”, founded in Parma in 2002, he is the host of the only Italian radio show focused on cannabis and has published 4 books on cannabis and its legalization.
In January 2017, the Italian government passed a law (242/2016) which regulates the cultivation, transformation and sale of Cannabis and Cannabis derived products. Under this new legal framework, it is legal to produce and market Cannabis and related products, which contains a percentage of THC less than 0.2%.
EasyJoint is fully vertically integrated from seed to consumers in Italy. EasyJoint buys its cannabis input product from a large exclusive contracted independent farmer’s network across Italy, to whom EasyJoint sells female seedlings that meet their strict premium specifications, thus eliminating the risk of growing male plants. In addition, EasyJoint has established the first Italian hemp pasta for the consumer market under the brand EasyJoint. It will be officially launch in Montreal before the end of 2018.
John McMullen, Chief Executive Officer of LGC Capital, stated, “With approximately 85% of the cannabis light distribution in Italy and healthy revenue generation, EasyJoint is a significant investment opportunity for LGC. We seeItaly, with a population of 60 million, as one of the key European market for cannabis growth and a springboard into other parts of the EU over time. This deal represents LGC’s third investment in Europe in 2018 and allows us to work closely with other LGC investee companies to grow and sell legal cannabis products to EasyJoint for their distribution.”