Body and Mind Inc. (CSE:BAMM) (OTC:BMMJ) and Australis Capital Inc. (CSE:AUSA) (OTC:AUSCF) just announced that through Body and Mind, they’ve entered an agreement that allows them to acquire 89.75% of Green Light District Holdings, Inc. by way of a $5,200,000 USD senior secured convertible note at a rate equal to 20% per annum.
Shares of both companies are trading up on the news intraday, but there still may be other ways to profit from the deal. If you’re late to the trade, or just want to squeeze out more alpha, here’s everything you need to know…
Green Light District Holdings, Inc. 101
- According to the release, Green Light District Holdings, Inc. is the owner of the well-known ShowGrow dispensary brand and owner of the ShowGrow Long Beach dispensary, 43% of the equity interest and 60% of the voting rights in the ShowGrow San Diego dispensary, 30% equity interest in ShowGrow Las Vegas, and 100% ownership of the popular ShowGrow app.
- The dispensaries are in various stages of licensing:
- Long Beach has a medical license, but Green Light District Holdings is working towards receiving its recreational status;
- San Diego has a conditional use permit, but still needs to be built out and is not yet open for business. Green Light District Holdings is working towards receiving its recreational status for the San Diego Location;
- Las Vegas has a recreational license.
GB Sciences’ Valuable Sliver of ShowGrow Las Vegas
- Over 35 million tourists have visited Las Vegas since January of this year, and Nevada’s first year of total taxable marijuana sales hit $529.9 million.
- With a retail license already in place, we can assume that the ShowGrow Las Vegas location produces equal if not more revenues than any of the other dispensary locations listed above.
- Back on June 28th, 2016, Growblox Sciences, Inc. announced that it held a 10% interest in GBS Nevada Partners LLC, and that GBS Nevada Partners LLC wholly owns the Showgrow in Las Vegas. Additionally, it was announced that GreenLight District Holdings, LLC was contracted to manage the daily operations of Showgrow.
- Growblox Sciences, Inc., now known as GB Sciences, Inc. (OTC:GBLX), could be seen as a play on ShowGrow Las Vegas. This could offer upside if Body and Mind Inc. and/or Australis Capital Inc., through and/or outside of their deal with GreenLight District Holdings, wanted to increase its 30% equity interest in ShowGrow Las Vegas through the acquisition of GB Sciences’ 10% stake. After all, GreenLight District Holdings is already managing day-to-day operations at that location.
- Beyond that, a 2015 SEC filing shows that GB Sciences’ subsidiary, GB Sciences Nevada LLC, was granted “slotting of 20% of [the Las Vegas dispensary’s] most prominent in- store retail merchandising shelf space,” which has to be worth something.
- As an additional, but unrelated, piece of upside for the GB Sciences trade, the company recently entered the Oklahoma medical marijuana market via a royalty agreement with 4EVERGRN, LLC, which was awarded cultivation, processing and dispensary licenses by the Oklahoma Medical Marijuana Authority.
There is no way of knowing if a buyer will come along for GB Sciences’ stake in GBS Nevada Partners LLC, or if they have any interest in selling it. However, two things we do know for sure are that over 35 million tourists have visited Las Vegas since January of this year, and Nevada’s first year of total taxable marijuana sales hit $529.9 million.
With a pie that large, it comes as no surprise that companies have been deploying massive amounts of capital to secure their piece. Just a few weeks ago, Exhale Brands Nevada acquired a Las Vegas dispensary from Terra Tech Corp. (OTC:TRTC) for $6.25 million. The way things have been going, these prices will only go up.
Before making specific investment decisions, readers should seek their own professional advice and that of their own professional financial adviser. I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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