Heritage Cannabis Holdings (CANN.C) closes the door on Premium 5 acquisition and refines growth strategy

Heritage Cannabis Holdings (CANN.C) closed its acquisition of Canadian-based recreational and medical cannabis company, Premium 5, today, according to a press release.

Premium 5 products have stretched to retailers across eight provinces, and is one of the only concentrate brands available to medical patterns from coast to coast through both the Shoppers Drug Mart and Shelter Market platforms. The company contends that the relationships they’ve forged with provincial boards will be important in extending their reach for all their products and planned new releases.

“This transaction delivers on several critical strategic objectives including immediate coast-to-coast sales and an impressive catalogue of products for both the provincial boards and consumers across Canada. We continue to build out our strong product development pipeline catering to multiple consumer categories and price points, and the addition of Premium 5 will expand our reach and accelerate the growth of our domestic and international platform,” according to Clint Sharples, chief executive officer of Heritage.

Heritage is a cannabis company dealing in the production and sale and medical and recreational hemp and cannabis based products and services. They operate through its subsidiaries Voyage Cannabis and CannaCure. We originally wrote about this acquisition when it was announced in December.

Premium 5 has already scaled revenues to a yearly run-rate approaching $20 million while cutting their overhead by shifting to an asset light model while making use of a small, experienced team. The company intends to optimize their existing capacity by bringing many of the functions presently outsourced to other firms in-house, thereby increasing EBITDA margins of an already profitable business and making strides towards positive cashflow for Heritage.

The deal is an 150 million all-share deal, the majority of which will be held in escrow by Heritage and released, subject to any reductions for indemnification claims. Also, as part of the acquisition, the company has agreed to pay out even more depending on certain conditions being met, including certain revenue milestones while maintaining a responsible gross margin for the next two years. This will give Premium 5 shareholders the chance to earn even more—up to $20 million—in common shares.