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Monday, Dec 6, 2021
Mugglehead Magazine
Cannabis & psychedelics industry news based in Vancouver, B.C.
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Business

High Tide expands US presence with Colorado CBD acquisition deal

The firm is buying 80% of NuLeaf for US$31M

High Tide says the acquisition boosts its current U.S. revenue run rate by around 40 per cent to C$70 million. Image via NuLeaf

Leading Canadian cannabis retailer High Tide Inc. (TSXV: HITI) (Nasdaq: HITI) (FSE: 2LYA) is deepening its roots in the American market with a deal to buy a Colorado-based CBD maker.

In a statement Monday, High Tide said it’s made a deal to acquire 80 per cent of NuLeaf Naturals, LLC for US$31 million, with a three-year option to buy the remaining 20 per cent at any time.

Founded in 2014 with headquarters in Denver, the company says NuLeaf is a market leader in the production and distribution of CBD wellness products.

High Tide notes the firm’s strong e-commerce presence, a distribution deal involving hundreds of Sprouts Farmers Market stores and the ability to make vegan softgels, which is reportedly rare among U.S. manufacturers.

The Canadian retailer says the deal will solidify its position as a major CBD player globally. High Tide started in the sector with the launch of U.S. e-commerce site CBDCity in 2020, and bought FAB CBD and Blessed CBD in 2021.

Read more: High Tide switches to discount club model

Read more: High Tide reports quarterly revenue up 18% to $48.1M

The company says it will take advantage of cross-business synergies, including using NuLeaf’s cGMP-certified facility, as well as producing the acquired firm’s Multicannabinoid products across markets in the U.S., Canada and via Blessed CBD in the U.K.

High Tide says the deal will be highly beneficial to its financial results, with NuLeaf generating revenue of US$19.4 million and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of US$5.26 million in the 12 months ended Sept. 30.

“With this announcement, we have doubled down on our efforts to become a global market leader with respect to hemp-derived CBD production and e-commerce sales,” CEO Raj Grover said in the statement. “As international markets open up and as export regulations evolve, NuLeaf’s cGMP-certified facility positions us to take advantage of the global CBD business opportunity.”

In October, High Tide said it was switching its core retail operations to a discount club model.

Company stock rose nearly 4 per cent Monday to US$6.32 on the Nasdaq.

 

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