Cannabis and accessories distributor Humble & Fume Inc. (CNSX: HMBL) (OTCMKTS: HUMBF) and private investment fund Green Acre Capital Distribution Corp. have formed a joint venture that will focus on cannabis distribution throughout the United States.
The joint venture, called HC Solutions Holdings Inc., will initially expand Humble’s cannabis distribution operations into California.
“Humble is excited to launch in the California market, delivering something new to the cannabis brands in that area,” Joel Toguri, Humble CEO, said in a statement.
Humble invested US$8 million into the joint venture, with Green Acre making a US$2 million investment for a 20 per cent interest.
Green Acre funded its investment through an option agreement with Johnson Brothers, a U.S.-based wine, spirits and beer distributor.
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In November, Green Acre made a US$8 million private placement to acquire 15.23 per cent of Humble through an option agreement with Johnson Brothers, with a letter of intent earmarking an additional US$2 million for the formation of the joint venture.
“This investment by Johnson Brothers, through their Green Acre option agreement, is a pivotal milestone for our expansion into the United States,” Toguri said at the time. “We are actively executing on our growth strategy, which includes the previously announced agreement to acquire licensed California cannabis distributor, Cabo Connection.”
Green Acre can increase its ownership in the joint venture to 50 per cent by investing up to an additional US$8 million over the next two years.
“The additional $2 million investment by Johnson Brothers, funded through their Green Acre option agreement, demonstrates continued support for our U.S. expansion strategy,” Toguri said.
California is currently one of the largest adult-use markets globally, worth approximately US$4.4 billion and expected to double over the next 10 years.
“We are actively executing on our growth strategy,” Toguri said. “As our business evolves and expands, we continue to be hyper focused on sustainable profit generation and positive cash flow to deliver long-term shareholder value.”
Humble & Fume stock was down approximately 13 per cent Tuesday to $0.23 on the Canadian Securities Exchange.