Glass House Brands (GLAS.U), one of the fastest-growing, vertically integrated cannabis and hemp companies in the US, announced today that its previously disclosed conditional agreement to accept a $50 million strategic investment from TPCO Holding Corp. has been terminated.
“In addition to our supply of award-winning, in-house cannabis, we remain well-positioned with sufficient access to both high-quality, low-cost indoor and outdoor-grown cannabis for use in our portfolio of branded products that are sold through our wholesale and direct-to-consumer channels,” said Steve Allan, Chief Executive Officer of The Parent Company.
Growing up, I was taught that those who live in glass houses shouldn’t throw stones, yet Jonathan Sandelman, founder of Mercer Park Brand Acquisition Corp. (“Mercer Park”), seems to think Glass House Brands is fit to throw all the stones that it wants. Glass House recently completed a business combination with Sandelman’s Mercer Park, a special purpose acquisition company (SPAC), on June 29, 2021 and has been approved for listing on the NEO Exchange beginning July 5, 2021. Keep in mind, Mercer Park is responsible for sponsoring the first cannabis SPAC in 2017, now know as Ayr Wellness, one of the most successful SPACs to date with returns of over 600%.
Through this merger totaling a $1 billion equity valuation, Glass House will receive the financing to acquire its competitor Element 7, which is expected to add an additional 17 retail stores to the Company’s roster by Q1 2022. Furthermore, funding from this merger will be used to purchase a 5.5 million square-foot greenhouse cultivation facility in Ventura County, CA, greatly expanding the Company’s cultivation footprint. With this in mind, Sandelman’s optimism appears to be warranted, however, how will the recent termination of a $50 million strategic investment from TPCO affect Glass House?
“Glass House is building a robust cultivation footprint in California, and we look forward to working with their team in the future on potential collaborations as we broaden our reach across the State. Looking ahead, we will continue to strategically deploy our capital on high-growth investment opportunities that will solidify our leadership position and offer strong value for our shareholders,” continued Mr. Allan.
According to Glass House, the Company does not expect this termination to impact any of its upcoming milestones including the purchase of the Ventura County greenhouse facility which is expected to be completed this quarter. The Company is currently negotiating with several banks and lenders for property secured financing, most of which will be used for retrofitting. Glass House intends to consider future partnership opportunities with TPCO following the successful purchase and retrofitting of this facility.
Image from Graham Farrar, Glass House Group
Having developed a portfolio of popular brands including Glass House Farms, Forbidden Flowers, and Mama Sue Wellness, Glass House has positioned itself nicely in California’s lucrative cannabis market. In particular, Glass House Farms achieved 4% market share, rising from #63 to #2 on BDS’ statewide ranking by the end of 2020. Furthermore, in 2020, Glass House grew revenue 185% year-over-year to USD$53 million and expects to generate full year 2022 revenue and adjusted EBITDA of approximately USD$326 million and USD$104 million, respectively. With the support of Mercer Park behind it and several milestones planned for the near future, Glass House could see considerable growth following its listing on the NEO Exchange on July 5, 2021.
Note: Glass House Brands (GLAS.U) is not currently public and will not be until July 5, 2021.