Fiore Cannabis Ltd. (CSE: FIOR) (OTCQX: FIORF) (“Fiore” or the “Company”), a licensed multi-state cannabis cultivator, producer and retailer, today announced it has signed a Letter of Intent to purchase California Patients Club (“CPC”), a cannabis delivery company operating in the state of California, for US$1.2 million payable in a stock and cash transaction. The delivery business will further integrate Fiore’s service offering in California where the Company operates the Green Leaf Wellness cannabis retail store in Desert Hot Springs in the Coachella Valley.
The acquisition is primarily being funded with Fiore shares at a valuation that will be determined at closing. The shares will be locked up for an initial six months and then released in equal parts quarterly over three years using an agreed-upon release mechanism. The acquisition is expected to close in 90 days.
“There is such energy and excitement in the Coachella Valley for the cannabis industry. Our dispensary there is doing significant business serving recreational and medical customers, primarily in person. With regulations in California supportive of cannabis delivery, we see the opportunity to enter the delivery business, tie it to our growing retail business, and generate additional revenues for the Company,” said Erik Anderson, President and CEO of Fiore Cannabis.
CPC is one of the top cannabis delivery services in the state with annual sales of US$2.2 million and a strategic focus to this point on northern California markets. By aligning with Fiore, CPC owner John Jacobs and his operations team see the opportunity to extend their e-commerce business and delivery services to include southern California markets such as the Coachella Valley.
“We have developed a top-tier cannabis delivery and e-commerce business with a solid customer base,” said John Jacobs, Owner of California Patients Club. “We think we have the scale and the ability to grow our business beyond our current markets and aligning with Fiore is going to enable us to do just that. We want to be recognized as the best and most reliable delivery business throughout the state of California and this takes us one step closer to realizing that objective.”
Anderson expects the acquisition to include synergies in sales and operations for Fiore’s California operations. “We can apply CPC’s technology, footprint and distribution capability to new markets and further leverage our own retail operations to serve additional consumers in the state,” said Anderson.
The California cannabis market topped US$4.4. billion in sales in 2020 according to Marijuana Business Daily. Markets such as California are also seeing significant increases in demand this year as COVID-19 restrictions continue to improve across the U.S.
