The parent company of cannabis publication and brand High Times is selling its intellectual property and “18 licensing agreements across various product categories” to publicly traded Lucy Scientific Discovery in an all-stock deal.
The intellectual property (IP) will be used for “a stream of high-margin licensing and royalty income from the well-regarded High Times, Cannabis Cup, and 420.com brands,” Lucy Scientific, based in Victoria, British Columbia, said in a news release.
Lucy Scientific said it will also license back to Hightimes Holding Corp. “the right to operate retail stores and manufacture and sell THC products in the United States,” for which it will charge the Los Angeles-headquartered parent an annual fee of $1 million.
That fee will increase to $2 million in the event of federal marijuana legalization in the United States.
In exchange, Lucy will issue Hightimes 19.99% of its outstanding shares as well as five years of earnout payments “based on EBITDA (earnings before interest, taxes, depreciation and amortization) generated from the acquired IP, which can be settled with either stock or cash at Lucy’s option.”
The earnout payments “will be distributed to more than 40,000 Hightimes stockholders,” High Times reported in an online story that was later removed.
“A prime motivation for Hightimes to engage in the Lucy transaction is to enable the Hightimes stockholders to own equity in a Nasdaq-listed company,” the magazine wrote.
The deal is expected to close within two weeks.
Lucy Scientific said it expects the acquisition “to add at least $10 million of revenue and $5 million of EBITDA to its 2024 results and provide a solid foundation of growth as cannabis becomes legal around the world.”
High Times and Lucy have close family ties, according to cannabis industry publication Green Market Report.
Lucy Scientific shares trade as LSDI on the Nasdaq exchange.
The company describes itself as having “holdings and operations in a variety of psychotropic businesses” and holds a Controlled Drugs and Substances Dealer’s License in Canada.