Cannabis retailer High Tide Inc. (Nasdaq: HITI) (TSXV: HITI) (FSE: 2LYA) has added four stores to its network in Ontario after acquiring a family-owned retail business.
On Thursday, the Calgary-based company said it entered into a $2.5-million deal to buy Crossroads Cannabis stores in Stratford, Woodstock, Hanover and Markdale.
High Tide CEO Raj Grover says Crossroads has been a very popular cannabis store in the communities they serve, and the Stratford location specifically was the first shop to open in the city.
“As consolidation in the Canadian retail cannabis space has picked up steam, we have become the acquirer of choice,” Grover said in a statement.
“This has allowed us to be strategic in determining where to expand within Ontario, bringing our innovative discount club model to communities which we have not yet been able to serve directly.”
The Covid pandemic has led to longer times for “organic” store openings, and via acquisitions High Tide is keeping the store-opening momentum and expanding its retail operations, Grover explains.
“As I observed how the retail market has matured in Ontario, it became crystal clear to me that consolidation would be the path to true longevity,” Crossroads owner Robert Rowe said.
Read more: High Tide posts audited financials after delay
Read more: High Tide switches to discount club model
According to High Tide, for the three months ended Dec. 31, Crossroads generated annualized revenue of $7.6 million and annualized adjusted earnings before interest, taxes, depreciation of $700,000.
The purchase price represents a three-and-a-half times annualized adjusted EBITDA for the same time period.
The arm’s-length transaction is subject to approval by the TSX Venture Exchange, the Alcohol and Gaming Commission of Ontario and other customary conditions.
The $2.5 million will be paid in High Tide common shares.
After closing the deal, the stores will carry $285,000 worth of inventory.
The company expects to announce more acquisitions in the near future, as its goal is to open 150 stores by the end of the year. It currently has 115 stores nationwide, with at least 37 stores in Ontario.
Follow Natalia Buendia Calvillo on Twitter
natalia@mugglehead.com
Haley Kouyoumjian
March 25, 2024 at 9:25 am
It’s truly heartbreaking to see the way Rowe spoke about this deal, those of us on the floor building his brand were lead to believe much differently. Crossroads was our home, our passion that we treated along with Rowe as part of a family. He made us feel the same. After finally being informed of the coming sale “nothing but for your shirts and the name on the building is changing” we were promised and told repeatedly as we worked through the hurdles associated with such an acquisition. AFTER the sale is completed I’m emailed a new 14 page contract, quite extensive compared to my current 2 pages, that was met with a 6 person senior staff zoom meeting to tell us its sign the contract or leave the job.. when I attempted negotiating by simply requesting my current contract remain.
The manager of the store and myself walked out in complete shock, sadness and anger. We did not return.
Robert Rowe lied to us all and Canna Cabana took from that location everything a shop should be.. the residents of this town are the ones who suffered, we helped so many people.