Vancouver-based cannabis producer 1933 Industries
The agreement sees it take over general management of the Green Spectrum business and operations, running manufacturing, distribution, sales, marketing, staffing, accounting, and compliance. It will now build a manufacturing and extraction facility near Los Angeles and begin supplying the Golden State with its full suite of branded products.
The facility will be finished by October 2019, and it then plans to distribute its THC-based Alternative Medicine Association products and its CBD wellness lines to retailers across the Golden State.
“California is already positioned to become one of the largest cannabis markets in the world and setting up a local operation has been a key priority for us,” said chief executive Chris Rebentisch.
1933 Industries takes its name from the year that America’s Prohibition on alcohol ended. It has built up operations in Canada, while it also became the first licensed cultivator in Las Vegas and it has been growing medicinal marijuana there for several years.
It also has an adult-use license, and its Canna Hemp line of CBD wellness products has listings in 800 retail outlets across the U.S.
The expansion into California makes it a multi-state operator, and it plans to follow a vertically integrated turnkey model there.
Green Spectrum is a licensed cannabis cultivator, manufacturer, and distributor, and it also holds a pending home delivery business license. The agreement gives Green Spectrum a non-exclusive right to produce, manufacture, market, and sell 1933 Industries’ products within California, but it essentially means that 1933 Industries will be running the show.
The Golden State’s legal cannabis industry is tipped to enjoy strong growth over the next six years and it should surge past the $6 billion mark by 2025. 1933 Industries pointed out that it is larger than the Canadian market, and also larger than Arizona, Colorado, Oregon, Nevada, and Washington State, ensuring a strong opportunity for it to drive growth in its business.
1933 Industries boasts strong brands, a stable management team and diverse operations spanning Canada and two different U.S. states, plus adult-use, medicinal, and wellness lines. It has also teamed up with skating legend Tony Hawk for a range of hemp-based recovery products.
It reported a net loss of $7.3 million in the three months to April 30, 2019. Cash balance was $14.7 million following a non-brokered private placement that raised $4.5 million.
It strengthened its cash balance the following month by selling its Las Vegas cultivation facility for US$10.5 million. The deal is a leaseback agreement for a period of 10 years and it can extend that for another decade if it wishes.
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