Venerable California vertical marijuana operator Harborside is making a big move to expand in the state with definitive agreements to acquire Urbn Leaf, a San Diego-headquartered retailer, and Loudpack, a cultivator, processor and distributor based in Los Angeles.
The combined company will be renamed StateHouse Holdings after the stock transaction, according to a Tuesday news release.
StateHouse will become one of the largest marijuana operators in California, with 15 retail locations and 230,000 square feet of greenhouse cultivation space, according to the release.
The retail locations include expected openings in the next 12 months.
Harborside shareholders will vote on the transactions and name change at a special meeting in the first quarter of 2022.
Harborside also announced Tuesday that it is raising $10 million of capital through a private placement and signed a letter of intent with Newport Beach, California-based Pelorus Equity Group to complete a $77.3 million real estate debt financing deal.
The additional capital will help support the UrbnLeaf and Loudpack transactions and future growth, according to a news release.
“Since reconstituting the company’s board of directors last year, our team embarked upon an ambitious mission to create a unique platform capable of consolidating California and driving significant growth through added scale. With these transactions, we are working to create a West Coast cannabis powerhouse,” Harborside Chair Matthew Hawkins said in the release.
Hawkins will become chair of StateHouse after the transaction.
Urbn Leaf CEO Ed Schmults is expected to be appointed StateHouse CEO, while Loudpack CEO Marc Ravner is expected to become StateHouse president.
The transaction is structured based upon the relative enterprise values of Harborside, Urbn Leaf and Loudpack, according to the release.
Consideration will include the issuance of 151.4 million Harborside shares, 2 million warrants and the assumption and restructuring of debt.
After the transaction closes, existing Harborside, Loudpack and Urbn Leaf shareholders will own approximately 35%, 39% and 26% of StateHouse, respectively.
Harborside said the combined revenue for Harborside, Urbn Leaf and Loudpack is roughly $165 million for the first nine months of 2021.
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Harborside said it had gross revenue of $57.8 million for that period, while Urbn Leaf and Loudpack posted revenue of $45.9 million and $61.4 million, respectively.
In March, Harborside made a $5 million “strategic investment” in Loudpack.
StateHouse will trade on the CSE under the ticker symbol STHZ.