High Tide completes Chestermere cannabis store purchase for C$670,000
The Oct. 8 cash deal lifts its Canadian network to 234 stores, including 93 in Alberta, and the shop is set to become a Canna Cabana.
Theo Marchetti
A cannabis store in Chestermere, Alta., changed hands for C$670,000 in cash on Oct. 8. High Tide Inc. CVEHITI NASDAQHITI FRA2LYA completed the purchase, raising its Canadian store count to 234, including 93 in Alberta, the company said in its Oct. 9 release.
High Tide's CVEHITI shares closed at C$3.68 on the TSX Venture Exchange at 4 p.m. EDT on Oct. 8. That close preceded the Oct. 9 announcement, so it does not show how investors responded to the purchase.
The deal was an arm's length transaction, and High Tide paid the full price at closing, according to the release. The buyer took over an established shop, although the company has not dated the start of sales under its own banner.
The Store's Earnings Set the Price
High Tide based its 2.1-times purchase multiple on approximately C$316,000 in annualized adjusted EBITDA from the store for the three months ended Aug. 31. The annualized measure extrapolates a quarter of operations; the company did not disclose the store's revenue or a full year of results.
The acquired shop sits at 100 Rainbow Road, along a route used by commuters travelling between Chestermere and Calgary, according to High Tide. The company says the property has a restaurant and other service businesses, with a grocer and liquor store nearby. It expects those neighbours to bring repeat visits suited to its discount club model, but gave no customer traffic or sales forecast.
"Today, we're pleased to have secured an established, cash-flowing store at an attractive 2.1 times annualized Adjusted EBITDA," High Tide founder and chief executive Raj Grover said in the Oct. 9 release.
At 93 Alberta shops, the province represents roughly two in five of High Tide's 234 Canadian locations. The company's Oct. 9 release also lists stores in British Columbia, Saskatchewan, Manitoba and Ontario, and one international location. The Chestermere purchase adds one shop to a Canadian network that already spans five provinces.
Alberta Requires Approval Before Ownership Changes
Alberta Gaming, Liquor and Cannabis says cannabis retail ownership changes require approval before a sale. Its June 2023 bulletin says section 112 of the Gaming, Liquor and Cannabis Regulation covers a business sale that changes control: registration is automatically cancelled, and the control change requires approval before the sale. Section 113 covers a sale of part of a business that does not change control, with approval required before the sale's effective date. High Tide's Oct. 9 release does not date an approval or say which provision applied to this purchase.
High Tide plans to rebrand the acquired store as Canna Cabana. The release treats the timing of sales at the new location, conversion to the banner and maintenance of required approvals as forward-looking. It does not set a date for conversion or for sales under High Tide's operation.
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The Oct. 8 closing completed the C$670,000 purchase. The Oct. 9 announcement left the rebrand and the start of sales under High Tide undated.
