Connect with us

Hi, what are you looking for?

Friday, May 20, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Business

High Tide buys family-owned Crossroads Cannabis stores for $2.5M

As Canadian cannabis retail consolidation picks up steam, CEO Raj Grover says his company has become the ‘acquirer of choice’

High Tide acquires Crossroads Cannabis retail stores
Photo via Crossroads Cannabis

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 StratfordWoodstockHanover 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 Mugglehead on Twitter

Like Mugglehead on Facebook

Follow Natalia Buendia Calvillo on Twitter

natalia@mugglehead.com

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like

Health and Safety

Science doesn't know yet, but one psychedelic researcher is chasing clues to see if it can

Canada

As more medium-to-small producers came into play this year, great weed started hitting legal shelves at fairer prices

Culture

Punishments for possession include caning and the death penalty. Despite a global trend of reform, The Fine City remains staunch in its anti-drug stance

Analysis

While legal weed businesses decry enforcement of their accounts, the platform says it's keeping its all-ages community safe