SearchCore Strikes Deal to Sell Dispensary Listing Site WeedMaps, Plans to Exit Cannabis Industry
SearchCore – one of the few publicly traded companies involved in the medical marijuana industry – has signed an agreement to sell MMJ heavyweight WeedMaps Media Inc. to an undisclosed buyer. The price tag: $3.75 million and the assumption of more than $8 million in obligations.
It’s unclear if the sale will lead to any immediate changes to WeedMaps, an online listing and review site that hundreds of dispensaries across the country use to connect with patients.
The development is interesting for several reasons:
#1. With the sale, SearchCore says it will effectively exit the medical marijuana business.
The company, which provides Internet marketing services, plans to focus on other areas including the recreational sports, manufactured homes and tattoo industries. However, its website still shows that it owns two other MMJ companies – SafeAccessMD and MMJMenu. Officials did not return emails and calls for comment, so it’s unclear what the company’s plans are for those firms. SearchCore spent the last two years acquiring and consolidating MMJ companies to, as it says, “quickly become the largest publicly traded company in the medicinal cannabis industry.” Its decision to exit the industry, therefore, is somewhat puzzling.
#2. The timing of the sale is notable.
WeedMaps is one of the most well-known companies in the medical marijuana space, as it has become the premier dispensary listing service/directory. On one hand, it’s understandable why SearchCore would want to sell the company now: The MMJ industry has been reeling from a federal crackdown, and hundreds of dispensaries have closed this year. Several industry insiders have privately questioned the health of WeedMaps, given that it lost a sizable chunk of its client base in the turmoil. So perhaps SearchCore wants to move into industries that are more stable.
On the other hand, there’s a huge amount of optimism surrounding the cannabis industry in general now that Colorado and Washington have legalized marijuana. Many observers and investors are banking on rapid growth, and it seems WeedMaps is poised to capitalize on the market for recreational users.
#3. SearchCore is downsizing as a result of the sale, saying in a press release that it has “moved to a smaller headquarters facility with a smaller workforce in order to more closely align our expense structure with our near term revenue opportunity.”
The company’s abrupt about-face is all the more interesting because it seemed to be making progress financially. It reported a 21% spike in revenues during the third quarter and a solid increase in net income (which hit $1 million for the three-month period) as well as improved operating performance. However, its cash position dwindled to $800,000 from $1.5 million at the end of last year , while its debt rose to $8.6 million from $7.1 million. Its stock price has also suffered. It is now trading at about 45 cents a share, down significantly from its 52-week high of $1.59
#4. SearchCore does not reveal the buyer in its press release.
As part of the deal, the company will receive a $3 million secured promissory note, a reduction of over $8 million in liabilities “related to its obligations to previous SearchCore principals” and $750,000 in cash. The buyers will also take over SearchCore’s office lease in Newport Beach, California. The wording indicates that the sale could in fact be to those previous SearchCore principals, although an outside company or investors might have agreed to assume that debt.
Expect to hear more about these types of deals in general as more investors and companies look to enter the marijuana industry.
Marijuana cultivation facilities have been specifically identified as a key contributor to Denver’s increasing electric [click to continue...]
Five Alaskans were appointed to a board that will craft laws governing the state’s recreational [click to continue...]
The New York Health Department may announce winners of the five medical cannabis licenses up [click to continue...]
The Green Rush is back on in Massachusetts. The opening of the first medical cannabis [click to continue...]
Rules governing Oregon’s recreational marijuana market are taking shape, with state lawmakers sending two bills [click to continue...]
Republican presidential candidate Rand Paul made a splash in Denver on Tuesday, raising an estimated [click to continue...]
Dispensaries could be open in Hawaii in just over a year, as a bill establishing [click to continue...]
In an attempt to get around obstructionists in the state House of Representatives who have [click to continue...]
And then there were five. Dispensaries permitted in New Jersey, that is. Compassionate Sciences, Inc. [click to continue...]
Louisiana Gov. Bobby Jindal has signed a bill making his state the latest in the [click to continue...]
In another sign of the marijuana industry’s growing national reach, a New York-based real estate [click to continue...]
Washington State growers and processors would no longer pay a 25% tax on cannabis and [click to continue...]
Delaware’s only licensed medical cannabis dispensary officially opened in the northern town of Wilmington on [click to continue...]
Canadian medical marijuana producer and distributor Tilray said it will lay off 61 employees as [click to continue...]