Harvest Health Sells California Retail Cannabis Operations to Hightimes Holding Corp for $80 Million in Stock and Cash

Hightimes Holding Corp. today issued a Form 1-U detailing an $80 million transaction with Harvest Health & Recreation (CSE: HARV) (OTC: HRVSF). Harvest will sell up to 13 California dispensaries, most of which are not yet operational, to Hightimes for up to $12.5 million in cash and $67.5 million in preferred stock (675K shares of 16% Series A), with the ultimate price based upon the number of licenses transferred. Hightimes made an initial cash deposit of $1 million on April 27th, and an additional $4 million is due by June 9th.

The preferred stock is convertible at $11 into Hightimes stock, though the stock will be split 11-1 effective June 1st, at which point the conversion price will change to $1. Harvest has agreed to lockup the shares for six months, with conversion limited to 10% of its shares each six months thereafter until five years. There are conditions for automatic conversion detailed in the filing as well.

The Harvest website indicates that it currently operates four dispensaries in California, with locations in Grover Beach, Napa, Palm Springs and Venice, and it acquired two Have a Heart dispensaries when it purchased Interurban Group, including locations in Oakland and Coalinga. On its conference call earlier this month, it indicated that California was not a core focus of the company any longer.

In a recent filing, Hightimes has announced another extension in its Reg A+ offering from March 31st to May 15th.

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Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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