Jushi to Buy Nevada Cannabis Operator NuLeaf for $52.5 Million

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Jushi Holdings Inc. Further Expands Nevada Footprint Through Agreement to Acquire Vertically Integrated State Operator
  • Acquisition Includes Three Retail Dispensaries, a Cultivation Facility and a Product Manufacturing Facility
  • Expands Jushi’s presence in Nevada’s attractive limited license retail market
  • Increases Jushi’s Permitted Licensed Retail Footprint to 39 Dispensaries Nationwide1
  • Purchase Price of up to US$62.5 Million Represents a ~4.5x multiple on NuLeaf’s full year 2022E EBITDA2

BOCA RATON, Fla., Nov. 17, 2021 (GLOBE NEWSWIRE) — Jushi Holdings Inc. (“Jushi” or the “Company”) (CSE: JUSH) (OTCQX: JUSHF), a vertically integrated, multi-state cannabis operator, announced that it has entered a definitive agreement (the “Agreement”) to acquire NuLeaf, Inc. together with its subsidiaries and affiliated companies (collectively, “NuLeaf”), a Nevada-based vertically integrated operator, for total consideration of up to US$62.5 million (the “Acquisition”). NuLeaf currently operates two high-performing adult use and medical retail dispensaries in Las Vegas, NV (the “Clark Dispensary”), and Lake Tahoe, NV (the “Lake Tahoe Dispensary”), in addition to a 27,000 sq. ft. cultivation facility in Sparks, NV, as well as a 13,000 sq. ft. processing facility in Reno, NV. Additionally, NuLeaf owns a third licensed retail dispensary located directly on Las Vegas Boulevard (the “Las Vegas Strip Dispensary”), expected to become operational in early 2022, subject to regulatory approval and other conditions.

Upon completion of the acquisition of NuLeaf, and the previously announced Apothecarium Nevada3 acquisition, Jushi will grow its retail presence to four dispensaries in the $1.0 billion4 Nevada cannabis market, three of which are located in the bustling Las Vegas area. The Company will also bolster its existing cultivation and processing capabilities in the state with the addition of NuLeaf’s high-quality facilities, providing a strategic entry point into the Nevada wholesale market.

We are thrilled to enter into an agreement to acquire NuLeaf, a vertically integrated operator with the potential to significantly increase our presence in the Nevada retail and wholesale markets. NuLeaf boasts a well-established retail network with top-quality, design-forward dispensaries in coveted high-traffic destination locations.

Jim Cacioppo, Chief Executive Officer, Chairman and Founder of Jushi Holdings Inc.

In addition, NuLeaf’s cultivation and processing assets are strongly aligned with our strategic expansion strategy in Nevada. This acquisition is expected to generate significant top-line growth and be immediately accretive, as well as increase market share of Jushi’s best-in-class brands, and establish a leadership position in one of the largest cannabis markets in the U.S.

NuLeaf’s Cultivation and Product Manufacturing Facilities

NuLeaf’s cultivation operations span 27,000 sq. ft. over two floors in a 15,000 sq. ft. building in Sparks, NV. The building is equipped with ten single-stacked flower rooms, with a flower canopy encompassing approximately 6,800 sq. ft., and a custom automation system for controlled temperature, humidity, lighting, and CO2 enrichment.

NuLeaf also operates a separate 13,000 sq. ft. processing facility in Reno, NV. The facility currently has hydrocarbon extraction capabilities and can hold an additional extraction unit within the existing space.

Retail Dispensaries

The Clark Dispensary is located a block from the Las Vegas Strip on East Twain Avenue, near the intersection of Paradise Road in Clark County and is directly behind the iconic Venetian Luxury Hotel and Wynn Resort and Casino. East Twain Avenue sees approximately 17,000 – 20,000 cars per day7, while Paradise Road sees approximately 35,000 – 38,000 cars per day7. The dispensary is also one mile away from the Las Vegas Convention Center, one of the largest in the world, and is walking distance from the Madison Square Garden Sphere, which is set to open in 2023. Currently, the dispensary serves an average of 1,000 customers per day, while offering convenient delivery and curbside services. In addition, the location is expected to install a drive-thru that will provide convenient access for customers, while increasing throughput at the dispensary.

The Lake Tahoe Dispensary is located in Incline Village, a premier destination mountain town on the North Shore of Lake Tahoe in Washoe County. Located between mountains and beautiful Lake Tahoe, Incline Village is an outdoorsy town with easy access to ski resorts, hiking, biking, golf, water sports and more outdoor activities. The area attracts 15 million tourists per year who come by air and car year-round for the experience and is home to a community of locals. The dispensary is located in the center of town near local businesses and restaurants on Route 28, a main road that runs through Lake Tahoe which sees approximately 6,500 – 9,800 cars per day7. The dispensary serves the tourist and local community and features a modern mountain-style storefront with 15 parking spots. NuLeaf Lake Tahoe is the only licensed recreational retail dispensary in the area, with the closest competitor approximately 20 miles away in Carson City. Due to population size, no more than two adult-use dispensaries can operate in Incline Village.

In addition to NuLeaf’s operational dispensaries, the Las Vegas Strip Dispensary is expected to open in early 2022 upon regulatory approval and certain conditions. The dispensary is located next door to the 18b Las Vegas Arts District, which straddles West Charleston and is home to the city’s art-related galleries, studios, boutiques, stores, bars, restaurants and other venues. The 3,200 sq. ft. dispensary is at the intersection of Las Vegas Boulevard and W. Wyoming Avenue. Approximately 23,000 – 29,000 cars pass by the store each day7 on S. Las Vegas Boulevard, while W. Wyoming Avenue sees approximately 19,000 cars per day7. The dispensary will offer customers curbside pickup and delivery options in the Las Vegas area, which is home to over 640,000 residents and brings in over 42 million visitors each year.

Agreement Terms

Under the terms of the Agreement, Jushi has agreed to acquire 100% of NuLeaf’s operational dispensary assets as well as 100% of its cultivation and processing facilities for an upfront payment of US$52.5 million (subject to purchase price adjustments as set forth in the Agreement), comprised of US$15.75 million in cash, US$21.0 million in subordinate voting shares of the Company (the “Company Shares”)5 and a US$15.75 million unsecured promissory note.6

The Company has also agreed to issue up to an additional US$10.0 million in an identical percentage combination of cash, Company Shares5, and unsecured promissory note6 upon the occurrence or non-occurrence of the Las Vegas Strip Dispensary receiving the applicable regulatory approvals to commence operations (the “Additional Consideration”), bringing the total potential consideration for the Acquisition paid by the Company to US$62.5 million. The purchase price (inclusive of the full US$10.0 million of Additional Consideration) is expected to represent a multiple of approximately 4.5x NuLeaf’s full year 2022E EBITDA2, before accounting for further expansion opportunities at the Sparks, NV, facility.

The Acquisition, which is expected to close in the first half of 2022, is subject to certain customary closing conditions, including approvals from applicable regulatory authorities. Pursuant to the terms of the Agreement, the Company has the right to terminate the Agreement within 45 days of execution if the Company is not satisfied with its due diligence of NuLeaf for any reason.

1Includes an awarded conditional dispensary where Jushi owns 49%.
2See “Reconciliation of Non-IFRS Financial Measures” at the end of this press release for more information regarding the Company’s use of non-IFRS financial measures.
3 The Apothecarium brand is used under license with an affiliate of TerrAscend Corp.
4 The Nevada Cannabis Compliance Board (CCB) and the Nevada Department of Taxation (DoT)
5 Price per share calculation is equal to the average of the daily volume weighted average price for Company Share (in United States Dollars) on the fifteen (15) trading days immediately preceding the closing date, and which shall not be less than $4.50 or greater than $7.00 for a Company Share (in United States Dollars) on the trading day immediately preceding the closing date.
6 The promissory note provides for cash interest payments to be made quarterly, a five-year maturity and all principal and accrued and unpaid interest due at maturity.
7 ESRI ArcGIS Online Data.

About Jushi Holdings Inc.

We are a vertically integrated cannabis company led by an industry leading management team. In the United States, Jushi is focused on building a multi-state portfolio of branded cannabis assets through opportunistic acquisitions, distressed workouts and competitive applications. Jushi strives to maximize shareholder value while delivering high quality products across all levels of the cannabis ecosystem. For more information please visit www.jushico.com or our social media channels, InstagramFacebookTwitter and LinkedIn.

Original press release

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