Wildflower Acquires Retail and Cultivation Licenses in LA
VANCOUVER, British Columbia, March 19, 2018: Wildflower Marijuana Inc. (CSE: SUN) (FWB: RSP) (“Wildflower” or the "Company") signs agreement to acquire multiple California marijuana licenses in the City of Los Angeles including the ownership of a property with a Pre-ICO operating dispensary and cultivation facility.
Wildflower will acquire the maximum number of licenses one party may hold which will permit the Company to conduct any cannabis activity from seed to sale in the city of Los Angeles. The licenses include medicinal and adult use storefront and delivery, medicinal and adult use cultivation specialty indoor, medicinal and adult use manufacturer level 1 and medical and adult use distributor licenses for both the City of Los Angeles and the State of California.
Wildflower CEO, William MacLean stated, “This is a phenomenal opportunity for Wildflower. We are not aware of anyone in Los Angeles holding all these licenses. This will give us a huge first mover advantage over other cannabis companies trying to penetrate the California and LA markets. This is unique as it will allow Wildflower to not only expand its existing business in California but to take advantage of the other licenses and a Los Angeles dispensary which has been operating profitably for about 15 years.”
California is one of the most cannabis tolerant states, having first de-criminalized marijuana in 1975 and as of January 1, 2018, the largest regulated cannabis market in the world. Los Angeles is the second largest city in California with a population of 4 million (18 million if the surrounding area is included). Gaining this early foothold in all aspects of this regulated market in Los Angeles gives Wildflower the opportunity to monetize this acquisition many ways through each of the licenses.
The extraordinary opportunity to acquire these licenses is highlighted by the fact that less than 1% of an estimated 68,150 marijuana growers were licensed by the State of California for cultivation as of February 7, 2018 according to the California Growers Association. And, it is estimated there will be 398 retail licenses granted in Los Angeles based on population density while there were estimated to be more than 1,500 operating prior to legalization on January 1, 2018. As of today, only 44 retail recreational license have been granted and are legally allowed to operate in the City of Los Angeles.
Pre-ICO refers to medical marijuana dispensaries that were open before September 14, 2007, when the Medical Marijuana Interim Control Ordinance (ICO) went into effect. Only 135 dispensaries have this status despite there being up to 1,500 dispensaries in operation in LA prior to legalization. Pre-ICO dispensaries have been granted first priority for licensing under the adult use, or recreational, licensing regime implemented on January 1, 2018. Further, Pre-ICO dispensaries currently have the unique advantage of being able to relocate anywhere in the City of Los Angeles, irrespective of concentration limits imposed in each district of the City. Only Pre-ICO applicants are being given licenses at this time. The next wave of licenses will fall under a social equity program and only the final wave of licenses will be open to the public. Currently there is no indication of when the second and third wave of licensing will occur.
Consideration for the purchase of the licenses, the property and the fixtures comprising the dispensary and the grow operation is US$10.2M and the issuance of 200,000 common shares. The agreement is subject to due diligence, negotiation of a definitive agreement and is expected to close on or before April 17 2018. The Company has advanced US$350,000 as a deposit already. In conjunction with the acquisition the Company will complete a private placement of units (“Units”) at a price of C$1.50 per Unit for aggregate gross proceeds of up to $15,000,000. Each Unit shall consist of one common share of the Issuer and one half of one share purchase warrant (“Warrant”). Each whole Warrant will entitle the holder to acquire one common share of the Company at a price of $2.50 for a period of 12 months following the closing date of the private placement. Once resale restrictions on the Shares having expired and upon Company’s shares trading at or above a weighted average trading price of $3.50 for 20 consecutive trading days, Wildflower may give notice that the Warrants will expire 30 days from the date of providing such notice (in writing to Warrant holders and via a news release). The proceeds will be used for the purchase of the licenses, the property and working capital. The financing is subject to regulatory approval. All securities issued pursuant to the placement will be subject to a hold period of four months and one day from the date of closing. A commission may be paid on financing.
Prior to signing this agreement and in order to ensure the completion of this acquisition, Wildflower has secured the commitment of one of its largest shareholders to back stop the financing and provide the funds necessary to close on this transaction.
About Wildflower Marijuana Inc.
Wildflower is a cannabis company focused on developing and designing branded cannabis products. Wildflower sells its CBD+ products online and to retailers throughout the US and also produces and markets its THC products in regulated cannabis jurisdictions.
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