For the cash price of USD$15 million, the deal includes a 196,000 square foot facility on 6.5 acres of Northern Californian real estate and the cannabis packaging and processing equipment necessary for operations.
The building has already had $8 million sunk into it in the past two years to account for its vertical integration, and needs another $1.5 million to become operational.
“With the recent $8-million of tenant improvements performed, this is one of the largest cannabis-focused, vertically integrated facilities in California. The intended use of the facility will be to transfer branded companies that we acquire, or that we create, and bring them in-house. This means we have complete control over our nursery, grow, manufacturing, extraction and distribution,” Pakulis said.
The property owner specializes in developing real estate into USDA-grade, commercial HVAC (heating, ventilation and air conditioning) facilities.
Said owner has taken responsibility for all of the facility’s upgrades prior to the sale, ensuring its upgrades were kept to USDA standards.
The property will include divisions for:
- Transportation and distribution
If they close the deal, TransCanna will lease some of the space out to a third party laboratory testing company.
The facility is in an area zoned for cannabis, and can employ another 500 staff members with two operating eight-hour shifts.
Mockups for the proposed build-outs include an additional 400,000 square feet for a enclosed two-story grow facility.
Part of the agreement included bringing the seller on board as a consultant. They would then take on the management of the construction for the additional facility.
Pakulis has put down the necessary $250,000 deposit to secure the agreement and been reimbursed by the company. The only hitch is that the facility is not presently licensed for cannabis.
The company is going to get the ball rolling on licensing with all the appropriate regulatory bodies in February, and if they are approved at the local level, TransCanna will seek their licensing credentials with the state. The company has until March 15, 2019 to complete the purchase.
Financing for the acquisition is still pending, and will be announced by the company once they have it secured.
Upon closure of the deal, TransCanna will pay a success fee of up to two million common shares to Haywood Securities for financial advisory services rendered.
TransCanna will also pay an advisory fee of $110,000 in connection with the company’s IPO. This will be divided into 56,266 common shares, valued at $1.955 per share. The shares will be subject to a four-month hold period ending on June 2, 2019.
Full disclosure: TransCanna Holdings is an Equity.Guru marketing client