Canada’s C21 Investments acquires Nevada cannabis business in deal topping $50M

Canada-based C21 Investments is expanding into the Nevada marijuana market through an acquisition of Silver State Relief and Silver State Cultivation, a deal that’s valued at more than $50 million.

The investment, announced in a news release Monday, is the second move by C21 in what is expected to be a wave of Canadian acquisitions of U.S. cannabis companies.

Earlier this month, C21, formerly known as Curlew Lake Resources, acquired Swell Companies, an Oregon marijuana extraction company.

Vancouver, British Columbia-based C21 said its Silver State acquisition is the first transaction in a larger plan to have cultivation, processing, wholesale distribution and retail operations throughout Nevada.

Nevada’s recreational marijuana market has been surging since launching July 1, 2017, but the state’s MMJ market has declined.

Silver State, one of the first two companies to receive a cannabis cultivation, production and retail license in Nevada, has generated revenue of $28.5 million in the past 12 months, according to the news release.

Under terms of the acquisition, C21:

  • Makes a $20 million cash payment upon closing, plus grants 2.5 million shares of common stock when the deal closes.
  • Gives Silver State a three-year, $14 million note (3% annual interest) at closing, in which the principal later could be converted into C21 common shares.
  • Receives an option to acquire Silver State’s 155,000-square-foot cultivation facility and 8,000-square-foot dispensary in Sparks, Nevada, for $16 million.
  • May exercise an option to acquire a dispensary property scheduled to open later this year in Fernley, Nevada, for $2.2 million.

C21 said it also plans to spend at least $10 million for additional expansion in Nevada.

The company, which trades on the Canadian Stock Exchange under the ticker symbol CXXI, was up 15% to 2.30 Canadian dollars a share as of early afternoon Monday.

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