iAnthus Capital Holdings Inc (ITHUF)

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January 17, 2018 13:54 ET

iAnthus Capital Acquires Medical Cannabis Business of GrowHealthy Holdings, Marking Full-Scale Entry into Fast Growing Florida Market
Company to Host a Conference Call at 4:20 PM ET on Wednesday January 17 to Discuss its Largest Transaction to Date
NEW YORK, NY and TORONTO, ON--(Marketwired - January 17, 2018) - iAnthus Capital Holdings, Inc. ("iAnthus" or "the Company"), (CSE: IAN) (CSE: IAN.CN) (CNSX: IAN) (OTCQB: ITHUF), which owns, operates, and partners with licensed cannabis operations throughout the United States, announced today that it has acquired through merger and acquisition transactions substantially all of the assets of GrowHealthy Holdings, LLC ("GrowHealthy") and certain related subsidiaries (all transactions together, the "Acquisition", and all assets of GrowHealthy and its subsidiaries collectively, the "Business"). The Acquisition completes iAnthus' full-scale entry into the rapidly expanding Florida medical cannabis market, which is projected by Arcview Market Research to grow into a US$1 billion market by 2020 and which has seen a 300% increase in the number of registered patients over the past six (6) months. iAnthus previously acquired approximately six percent (6%) of GrowHealthy in a preferred share purchase in October, 2017.
GrowHealthy and its affiliate, McCrory's Sunny Hill Nursery, LLC ("McCrory's") comprise one of just thirteen (13) current Florida Medical Marijuana Treatment Centers ("MMTCs") licensed to provide medical cannabis under Florida's medical marijuana law. The Acquisition includes GHIAA Management, Inc., a wholly-owned subsidiary of GrowHealthy that holds an exclusive 40-year management contract to operate the medical cannabis business associated with the MMTC license issued to McCrory's (the "License"), together with an option to acquire 100% of McCrory's for a nominal consideration, pending approval of the Florida Department of Health.
The total consideration paid for the Acquisition was US$17,500,000 in cash and US$30,500,000 was satisfied in iAnthus common shares at a price per share of US$2.52.(1) The cash portion of the consideration for the Acquisition includes the purchase by the Company of the rights to a US$5,000,000 performance bond posted with the state in connection with the issuance of the License. Contemporaneously with the closing of the Acquisition, the Company's 2,925,003 preferred shares in GrowHealthy were redeemed in return for US$3,000,000 paid to the Company at closing.
"As one of the largest states in the U.S. with a population of nearly 21 million people and favorable demographics, Florida and its medical cannabis market provide a tremendous opportunity for iAnthus and its shareholders. The state's population includes a large percentage of older adults who can derive significant benefits from medical cannabis, and the Florida program has witnessed a rapid rise in its registered patient base since passage of the law," said Randy Maslow, President of iAnthus.
"GrowHealthy in particular boasts a state-of-the-art 200,000 square foot cultivation and processing facility in Lake Wales, a flagship dispensary location in a densely populated area of Palm Beach County, and the opportunity to open up to 25 dispensaries in Florida currently and more in the future," Mr. Maslow continued. "The GrowHealthy cultivation and operations team has already established itself as a leader in Florida's medical cannabis market, and we look forward to contributing iAnthus' capital and operational resources to fully build out GrowHealthy's infrastructure and capitalize on the enormous opportunity provided by Florida's medical cannabis market."
Pursuant to the Florida medical marijuana statute and regulations, GrowHealthy is permitted to immediately begin delivery of finished products and to open and operate up to twenty-five (25) dispensaries, a number which will be increased with every 100,000 patients that are added to the state medical marijuana registry. Construction on GrowHealthy's flagship Palm Beach County dispensary is expected to be completed during Q2 2018 and the 4,500 square foot facility is expected to open in July 2018. Additional dispensary locations in Palm Beach County and elsewhere around the state have been identified and are the subject of lease negotiations, and dispensary openings in the Tampa and Orlando areas are planned for Q3 2018 and Q4 2018, respectively. GrowHealthy has already commenced sales through product delivery, and will continue to expand its delivery capabilities throughout the year.
The Lake Wales cultivation and processing facility comprises almost 200,000 square feet on 33 acres, which at the time of licensure was the largest cultivation facility in the state. The size of the facility provides significant room for expansion and is capable of producing 18,000 kilograms of raw medical cannabis flower annually once the facility is fully built out. GrowHealthy has 4,000 square feet of canopy under cultivation currently and inventory of 32,000 grams of raw cannabis flower ready for processing into final products. The Lake Wales facility includes a 15,000 square foot extraction lab and commercial kitchen. GrowHealthy delivered its first product in November 2017, and holds a product inventory of 55 strains.
Background on the Florida Medical Marijuana Program
In November 2016, the Florida Medical Marijuana Legalization Initiative ("Amendment 2") was approved as an amendment to Florida's state constitution by more than 71% of Florida voters, allowing for a full-strength medical cannabis program to be established to replace the prior low-THC program that had gone into effect in 2015. During a special legislative session in June 2017, the Florida legislature passed legislation to implement Amendment 2 (the "Act"), and the Florida Department of Health thereafter issued implementing regulations.
Under the full-strength medical program, patients may receive medical marijuana certifications during their first visit with a physician, instead of awaiting completion of the 90-day wait period previously required. The Act provides a broad list of qualifying medical conditions, including post-traumatic stress disorder ("PTSD") and chronic pain related to a qualifying condition or terminal illness. The legislation allows for multiple permitted ingestion methods, including the administration of edibles, oils, vape pens, and capsules. There are currently thirteen (13) licensed MMTCs. Each MMTC is permitted to initially operate up to 25 dispensaries statewide, with a statutory formula for assigning a certain number of dispensaries into each of five regions across the state.
The Program currently includes 67,385 registered patients, of which 45,204 have been approved for ID cards. The registered patient total has tripled over the past six (6) months according to statistics provided by the Florida Department of Health.
http://www.floridahealth.gov/programs-and-services/office-of-medical-marijuana-use/index.html