The investment should allow the Cronos group to benefit from rapid growth in the U.S. cannabis market
PharmaCann Well Positioned in the Midwestern and Northeastern Limited License States
TORONTO and CHICAGO, June 14, 2021 (GLOBE NEWSWIRE) – Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (âCronos Groupâ) and PharmaCann Inc. (âPharmaCannâ), one of the largest groups Vertically integrated cannabis companies in the United States (âUSâ), today announced that they have entered into an agreement under which a wholly owned subsidiary of the Cronos Group has purchased an option (the âOptionâ) to acquire an approximate 10.5% interest in PharmaCann (the âTransactionâ) on a fully diluted basis. Exercise of the option will be based on various factors, including the state of federal cannabis legalization in the United States, as well as regulatory approvals, including in the states where PharmaCann operates, which may be required on exercise.
PharmaCann has a large geographic footprint in the United States and has built an efficient, effective and scalable operating model, comprising six production facilities and 23 dispensaries operating under the Verilife â¢ brand in six limited license states: New York, Illinois, Ohio, Maryland, Pennsylvania and Massachusetts. PharmaCann continues to invest in its manufacturing infrastructure and brand development to take advantage of significant business-to-business retail and wholesale opportunities.
âOur growth strategy in the United States is focused on creating long-term shareholder value by bringing together a portfolio of leading brands and intellectual property and positioning ourselves to deploy our products in the US market through investments and opportunities with American leaders who share our vision and commitment to the responsibility of distributing disruptive cannabinoid products that improve people’s lives, âsaid Kurt Schmidt, President and CEO of Cronos Group. âWe were drawn to PharmaCann as an investment because of their disciplined allocation of capital, strong track record and compelling presence in manufacturing and licensed retail. Additionally, we are excited to partner with PharmaCann because of our shared commitment to improving product quality and consistency through science and better operations and manufacturing.
âWe are pleased to announce our strategic alliance with Cronos Group,â said Brett Novey, CEO of PharmaCann. âThis investment validates our position as a leading vertically integrated US cannabis company and demonstrates our ability to continue to develop and improve our strong asset base. We are excited to be working with Cronos Group as we advance PharmaCann’s mission to improve people’s lives through cannabis.
Under the terms of the transaction, the total consideration paid by Cronos Group for the option was approximately $ 110.4 million, which was deposited by Cronos Group with a third party paying agent for distribution directly to shareholders of PharmaCann. The option is subject to certain anti-dilution and other adjustments.
Upon the election of Cronos Group and following its exercise of the Option, Cronos Group and PharmaCann will enter into commercial agreements which would allow each party to offer its products through the distribution channels of one or more the other of the parties. In addition, upon the election of Cronos Group and following its exercise of the Option, Cronos Group and PharmaCann will enter into an investor rights agreement which would grant Cronos Group certain governance rights, such as a seat in board of directors or an observer on the board of directors under certain conditions, a registration rights agreement which would provide the Cronos group with the usual registration rights for the ordinary shares of PharmaCann.
Michael Gorenstein, Executive Chairman of Cronos Group, and Jason Adler, Director of Cronos Group, each hold an indirect stake in PharmaCann by virtue of their stake in a fund affiliated with Gotham Green Partners, which is a shareholder of PharmaCann. A special committee composed entirely of independent directors of the Cronos group has been formed to assess and make recommendations to the board of directors of the Cronos group regarding the transaction and other opportunities in the United States.
The transaction has been approved by the board of directors of PharmaCann and the required shareholders of PharmaCann and approved by the board of directors of the Cronos group (except for Mr. Gorenstein and Mr. Adler) following the unanimous recommendation of the special committee of independent directors.
Cowen has served as financial advisor to the special committee of independent directors of Cronos Group and Sullivan & Cromwell LLP and McGuireWoods LLP has served as legal counsel to Cronos Group. Perella Weinberg Partners LP was a financial advisor to Altria Group, Inc.
Canaccord Genuity Corp. acted as financial advisor and Fox Rothschild LLP acted as legal advisor to PharmaCann.
About the Cronos group
Cronos Group is an innovative global cannabinoid company with international production and distribution on five continents. Cronos Group is committed to creating disruptive intellectual property by advancing cannabis research, technology and product development. With a passion for responsibly elevating the consumer experience, Cronos Group is building a portfolio of iconic brands. The Cronos Group portfolio includes PEACE NATURALS â¢, a global wellness platform, two brands for adults, COVE â¢ and Spinach â¢, and three brands of CBD derived from American hemp, Lord Jones â¢, Happy Dance â¢ and PEACE + â¢ . For more information about Cronos Group and its brands, please visit: thecronosgroup.com.
PharmaCann is one of the largest privately-owned and vertically integrated cannabis companies in the country, providing safe, reliable and high-quality cannabis products to people in the medical and adult use markets. PharmaCann’s geographic footprint includes PharmaCann dispensaries and cultivation and processing operations in six states. For more information on PharmaCann, please visit: PharmaCann.com.
This press release may contain information that may constitute âforward-looking informationâ or âforward-looking statementsâ within the meaning of applicable Canadian and US securities laws (collectively, âforward-looking statementsâ). All information contained in this document which is not clearly historical in nature or which necessarily depends on future or subsequent events may constitute forward-looking statements. In some cases, forward-looking statements may be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “plan”, “anticipate”, “intend to”. “,” Possible “,” “estimate”, “believe” or the negative of these terms, or other words, expressions or similar phrases intended to identify forward-looking statements. Some of the forward-looking statements contained in this press release include the intention of the Cronos Group to create a portfolio of iconic international brands and to develop disruptive intellectual property. Forward-looking statements are necessarily based on a number of estimates and assumptions which, although considered reasonable by management, are inherently subject to significant business, economic and competitive risks, financial results, earnings, performance or achievements expressed or implied by such forward-looking statements. Statements. Actual results may differ materially from current expectations due to the associated risks, among others: (i) uncertainties as to the consideration and / or ability of the Cronos group to exercise the option, including the status and future development of the federal legalization of cannabis in the United States; (ii) uncertainties as to the benefits expected from the Operation by the Cronos Group and the assumptions regarding the time of exercise of the Option; (iii) the possibility that the various conditions for the exercise of the option by the Cronos group may not be met, including, without limitation, any regulatory state approvals which may be required prior to the exercise the option and the possibility that a government entity may prohibit, delay or refuse to grant state regulatory approval in connection with the exercise of the option; (iv) changes to United States federal laws relating to the cultivation, distribution or possession of marijuana, including, without limitation, the United States Controlled Substances Act; (v) assuming that all the conditions for exercising the option are met, the possibilities that the exercise of the option may result in unforeseen costs; (vi) the potential for the industry in which PharmaCann and its subsidiaries operate to be subject to future risks, including regulatory and licensing risks; (vii) the response of employees, customers, suppliers, business partners, regulators, markets and the public to the announcement of the Transaction and, where applicable, in connection with the exercise of the Option; and (viii) other expectations and assumptions regarding the proposed transactions between Cronos Group and PharmaCann. Although the list of factors presented here is representative, no list should be taken as a statement of all the potential risks, uncertainties or assumptions that could have a material adverse effect on the consolidated financial position or results of operations of the Cronos Group. . Investors are cautioned that forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of the Cronos Group, which could cause actual results and developments to differ materially from those expressed, implied. or projected by forward-looking statements. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, including those discussed in the Cronos Group Annual Report on Form 10-K for the year ended 31 December 2020, and the Cronos Group Quarterly Report on Form 10-Q for the period ended March 31, 2021, both of which have been filed on SEDAR and EDGAR and can be viewed at www.sedar.com and www.sec.gov / edgar, respectively. Any forward-looking statement included in this press release is made as of the date of this press release and, except as required by law, Cronos Group disclaims any obligation to update or revise any forward-looking statement. Readers are cautioned not to place undue reliance on a forward-looking statement.
For more information, please contact:
Phone. : (416) 504-0004
Phone. : 312-667-6260 ext. 322019