SOL Global (SOL.C) is back on the market, with shares coming off halt in anticipation of the company’s name change to Bluma Wellness.

On October 15, 2019, a special meeting of common shareholders will be held in consideration of the company’s shift from an international cannabis investment company to a U.S. multi-state operator (MSO) in the vein of an iAnthus Capital Holdings (IAN.C).

To symbolize this change directives, another matter for shareholder consideration will be the name change from SOL Global to Bluma Wellness.

“We chose the name Bluma Wellness as an appropriate way to honor the true intent of each seed that we cultivate, harvest, and deliver as a product to ensure that every single one of our customers has a consistent and enriching experience that allows them to flourish.”

–Brady Cobb, SOL Global CEO

This new MSO will focus on three high-priority states: California, Florida and Michigan. California and Florida and two enormous population centres and Michigan recently voted to fully legalize cannabis, so SOL/Bluma’s thought process here is spot-on.

In his bible piece on SOL, equity.guru chief Chris Parry painted a portrait of Andy DeFrancesco, SOL’s chairman, as a man who lives to make deals. A deal-junkie, if you will. 

When I talked to him a while back, however, I was struck by something else entirely.

“You want me on your side,” he said.

He said this not as a threat, mind you, but as a boast.

“If you had a $5 million cannabis asset and you wanted to turn it into a $25 million deal with a big player, I’m your guy. I make it happen. I get your deal ready, I deal with government, I get your permits, I get your business plan, I get your shit together.”

Sure, every company out there has a deal guy. I get it. But the American cannabis space is, without sounding ominous, odd.

In my time down in Florida observing different U.S. MSO dispensaries, one recurring theme from executives we spoke to was the uncertainty about the ever-changing regulatory landscape.

Chris Melillo, Curaleaf (CURA.C) senior VP of retail operations, talked about how he was unsure about when his company’s dispensaries would be able to sell dried flower in-store in the state of Florida.

This is where DeFrancesco comes in. Due to the decentralized nature of U.S. legislative power, each state makes its own decisions and, largely, makes them all in different ways.

What is the state of legalization efforts in Idaho versus Michigan? And most importantly, how much should be paid for assets in a state by state basis?

DeFrancesco is the king of paying appropriate prices for assets. After all, he’s made a living buying low and selling high to companies like Aphria (APHA.T) and Wayland Group (WAYL.C).

If you’re tired of seeing goodwill and intangible assets taking up the lion’s share of your favourite weedco’s asset line, this is your guy. I can’t believe this is something worth writing about, but in an era of companies evaluating asset value after paying for it, it’s something you want in company management.

SOL’s financial outlook

SOL is currently trading at $1.83, down 10.3% on the day. The company has a market cap of $110M and has 54M shares outstanding.

Q1 2019 net income was $95M/$2.30 per share fully diluted. In the sale of LATAM Holdings to Aphria, the gain on sale of this property–essentially the profit made through selling a long-term asset for more than its book value–was $204.8M.

Lastly, net income nearly equalled the company’s market cap. In an industry where companies are trading at multiple times their revenue, that’s an achievement on its own.

Pretty cool.

–Ethan Reyes

Full disclosure: SOL Global is an equity.guru marketing client.