Harborside (HBOR.C) announced today that it has signed a definitive agreement to acquire 100% of the issued and outstanding equity of Sublimation Inc., better known as Sublime Canna.
“This acquisition adds an iconic, award-winning California brand, with an exceptional product offering and consumer following, to our growing brand portfolio…With the existing production capacity and soon to be completed upgrades at our Salinas cultivation facility, we are well-positioned to support the continued growth of the Sublime brands while expanding the reach of Harborside’s existing branded product portfolio in both the retail and wholesale markets, which we expect to ultimately drive increased profitability across our entire business. We’re very excited to continue to provide consumers with innovative, high-quality products while delivering strong value for our shareholders. The Company will issue new guidance in due course,” said Peter Bilodeau, Interim CEO of Harborside.
Sublime Canna was founded in 2016 and is best known for its expansive line of high-potency, high-quality and affordable Fuzzies branded pre-rolls. Sublime Canna’s Fuzzies pre-rolls come in a variety of shapes, sizes, and tastes. In addition to its Fuzzies branded products, Sublime Canna also offers vape cartridges, cannabis flower, gummies, and even batteries to charge your vape.
According to Marijuana Business Daily, across recreational markets in California, Colorado, Nevada, Oregon and Washington state, pre-roll sales increased by 47.1% from $640.1 million in 2019 to $941.6 million in 2020. I’m no analytics expert but an increase of of almost 50% in one year is pretty damn impressive nonetheless. With this in mind, Sublime Canna has delivered a revenue compound annual growth rate (CAGR) of roughly 70% since 2019. Moreover, the company ended 2020 with 7.9% California pre-roll market share.
With that being said, Sublime Canna’s award-winning Fuzzies pre-rolls could prove to be an invaluable asset for Harborside. Through this acquisition, Harborside expects to achieve significant synergies by bringing together Sublime Canna’s brands, production capabilities and robust distribution system with high-quality cannabis grown at Harborside’s Salinas, California cultivations facility. Moreover, the Company will leverage Sublime Canna’s marketing experience to increase the reach of its product portfolio and improve retail margins. With Fuzzies under its belt, Harborside hopes to bring the popular brand to additional legal recreations markets across the United States.
“Harborside is known for being an innovative pioneer within the California cannabis market and has garnered a long term reputation across the state for being a leading retailer and producing high-quality products. As a leader among California brands, we are thrilled that Sublime will join the Harborside owned-brand portfolio, leveraging their production and retail capabilities to further expand the distribution of Sublime products throughout California,“ stated Ahmer Iqbal, CEO of Sublime.
Upon closing, Harborside will acquire 100% of the issued and outstanding shares of Sublime Canna in exchange for a total consideration of USD$43.8 million.
Harborside’s share price opened at $2.35 and is currently trading at $2.35 as of 10:28AM ET.
Full Disclosure: Harborside is a marketing client of Equity Guru.
