News:
Origin House Completes Acquisition of Cub City, Bolstering Craft Cannabis Production Capabilities
NEWS PROVIDED BY
Origin House
May 02, 2019, 08:30 ET
Acquisition of Cub City brings Origin House a 24,600 square foot facility with annual production capacity of up to 1,400 kg of ultra-premium flower, and a team that has cultivated cannabis for some of the top craft flower and pre-roll brands in California.
OTTAWA, May 2, 2019 /CNW/ - CannaRoyalty Corp. d/b/a Origin House (CSE: OH) (OTCQX: ORHOF) ("Origin House" or the "Company"), a North American cannabis products and brands company today announced that it has closed the previously announced acquisition of Cub City LLC ("Cub City"), a licensed premium craft cannabis producer based in Sonoma County, California for total consideration of US$5.3 million (the "Acquisition").
"Access to bespoke cannabis production capacity and related expertise is valuable not just to new cannabis brands but also to heritage, established brands. The addition of Cub City to our cultivation roster strengthens our infrastructure and team in California, making us the partner of choice for brands across the spectrum," commented Marc Lustig, Chairman and CEO of Origin House.
Transaction Highlights
Cub City's 24,600 sq. ft. Santa Rosa facility has an annual production capacity of up to 1,400 kg of ultra-premium flower, along with pre-roll production capabilities.
As previously disclosed, Cub City holds a provisional state indoor cultivation license and a local minor-use permit for cultivation, non-volatile manufacturing, processing and distribution.
Currently undergoing improvements and upgrades, the Cub City facility is expected to be operational in July 2019.
Flower-based products comprise a major segment of the total cannabis market in California. In 2018, flower made up US$974 million, and pre-rolls made up US$1941 million of all cannabis sales in the state. With the Acquisition, Origin House further solidifies its position in the flower market, including the ultra-premium segment targeted by Cub City.
The Acquisition strengthens Origin House's cultivation capabilities through a licensed facility and a skilled production team that has experience cultivating for some of the top craft flower brands in California. Joining the Company under the supervision of Origin House employees Drew and Karen Duval, the team will leverage its expertise and Cub City's proprietary production techniques to produce ultra-premium offerings for the Company's current and prospective brand partners.
__________________________
1 According to data from BDS Analytics.
Related Party Transaction
Pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the acquisition of Drew and Karen Duval's membership interests in Cub City constitutes a "related party transaction" as both Drew and Karen are senior employees of the Company. Accordingly, their interests were declared to the Board of Directors (the "Board") of the Company and the Board has considered and approved the Acquisition. At the time the Acquisition was agreed to, the fair market value of the consideration payable by the Company was less than 25% of the market capitalization of the Company. As a result, the Company is relying on the exemptions from the minority shareholder and valuation requirements of MI 61-101 pursuant to Sections 5.5(a) and 5.7(a) of MI 61-101.
About Origin House
Origin House is a growing cannabis brands and distribution company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands. Origin House's foundation is in California, the world's largest regulated cannabis market, where it delivers over 130 branded cannabis products from 50+ brands to the majority of licensed dispensaries. Origin House's brand development platform is operated out of five licensed facilities located across California, and provides distribution, manufacturing, cultivation and marketing services for its brand partners. Origin House is actively developing infrastructure to support the proliferation of its brands internationally, initially through its acquisition of Canadian retailer 180 Smoke. Origin House's shares trade on the CSE under the symbol "OH" and on the OTCQX under the symbol "ORHOF". Origin House is the registered business name of CannaRoyalty Corp. For more information, visit www.originhouse.com.
Forward Looking Statements
Statements in this news release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in Origin House's periodic filings with Canadian securities regulators. When used in this news release, words such as "will, could, plan, estimate, expect, intend, may, potential, believe, should," and similar expressions, are forward- looking statements.
