Red Light Holland (TRIP.C) and Australian-based cannabis producer, Creso Pharma (COPHF.OTCQB), agreed to combine businesses today to create combined psychedelics and cannabinoid company called The HighBrid Lab, according to a press release.

 

This move will constitute a reverse takeover of Red Light Holland by Creso Pharma and include a premium of 29.9% based on a 30-day volume weighted average price of both companies circa June 15, 2021. The new company is expected to have an implied pro forma equity value of $347 million based on the closing share price of both Creso and TRIP on June 15.

 

The company is also bringing along Bruce Linton, former Canopy Growth (WEED.T) CEO and cannabis personality, in a non-executive chairman role on their board of directors. Linton’s something of a contentious sort and quite capable of dividing a room as to his merits, with half believing his presence a net positive given some of his experiences and successes, while others, who may have followed his rise and fall over at Canopy and realized he’s perhaps not fit to be in charge of a tyke on a trike, may see it as a red flag. As always, your mileage may vary.

 

HighBrid Labs will carry forward a cash position of $45 million and trade on the CSE under TRIP.

What Creso brings to the table

Prior to joining forces with Red Light, Creso Pharma had expanded their reach to four continents, including their home country of Australia, Europe, and South and North America—with the countries being Canada, Switzerland and Colombia.

 

 

Canada

Their Canadian offering is Mernova Medical, which includes 24,000 square foot EU GMP certified facility 60 kilometers outside of Halifax, Nova Scotia. It sports climate control rooms and irrigation with 10 grow rooms and a production rate of 3,500 kg per year. It’s presently in the first phase of its buildout, but when it’s finished it’ll have the ability to scale up to 200,000 square feet.

 

Colombia

Creso’s Colombian subsidiary are called Kunna S.A.S. It operates out of Medellin, Colombia and possesses five licenses. What this represents is access to an entirely new market for former Red Light, which can now get access to Argentina, Colombia, Chile, Mexico and Uruguay. Psilocybin is still technically illegal in all of those countries, but this gives them first mover advantage should this change.

Until then, they’ll have to rely on cannabis sales, and Creso had already established itself as among the few companies with the ability to commercially cultivate medicinal-grade cannabis in Colombia.

 

Switzerland

Last, the company brings their research and development wing from Switzerland. But it’s also set up as a launching station for deeper penetration into European markets, having developed and prepared cannabis products for both animal health and human health verticals.

HighBrid Lab trajectory

 

Red Light Holland had always been big on customer education before the combination, and they’re intending on continuing with that trend with HighBrid Labs, expanding both market and brand leadership in recreational psilocybin, supported by education, telecounseling and tech as the company expands.

 

It’s early yet for psychedelics, though. Red Light Holland operated primarily in The Netherlands, and only there in shooting a loophole that allowed the company to sell psilocybin truffles out of Smart Shops, and that’s fine for a start. As new markets open, especially in the United States, it’s important that the science continue to support long-term opportunities with both naturally occurring and pharma-grade drug discovery to ensure that the product improves continually. That’s where Creso’s recent acquisition of Canadian life sciences company, Halucenex, and Red Light Holland’s acquisition of Mera Life Sciences come in.

 

Halucenex is primarily focused on psilocybin’s medical capabilities in combating mental illness, but Mera Life Sciences is far more interesting. This company goes beyond psilocybin to touch on the more fringe psychedelics including peyote, ibogaine, ketamine, and ayahuasca. These could represent future market options if the psychedelics sector takes off.

 

Finally, there’s cannabis and its subsequent products. The combination gives Creso the opportunity to increase market share in Canada and now that they’re on the CSE, they can get their products into the United States, including seeking out U.S. based cannabis acquisitions in the near term. That also includes Creso Pharma’s CBD products, which will be distributed through SR Wholesale, Red Light Holland’s distribution company in the Netherlands.

 

Todd Shapiro, presently the CEO of Red Light Holland, will take over as CEO of the combined company and director. The rest of the board will consist of seven members, three of which, will be present directors of Red Light Holland and the other three will either be from Creso or nominated by Creso, with Linton taking up the seventh spot.

 

—Joseph Morton