High Times purchases 13 dispensaries from Harvest amid national exchange listing

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

The last we heard about High Times Holding Corporation was that the company could be scrapping its print publication. In recent news, the commended magazine owner has entered into a purchase agreement to acquire 13 retail cannabis dispensaries from Harvest Health and Recreation, Inc. 

Secured for $80 million worth of cash and stock, the deal will see High Times Holding Corp. gain ownership of a mixture of planned and actively-operating dispensaries. This acquisition gives the acclaimed media company an opportunity to firmly root itself in California’s ever-growing legal weed market.

Harvest will hand over its California-based dispensaries to High Times Holdings, which intends on maximizing profits through promoting its brand as the face of each dispensary. The well-known cannabis company’s artistic impact will be imprinted on the cannabis retail stores in the form of logos and color themes.

“We’ve long supported Harvest and the other cannabis-retail-trailblazers as they pushed forward despite changing legislation, insurmountable licensing fees, political stigma and, frankly, through a process that was designed to be difficult,” said Hightimes Holding Corp.’s Executive Chairman, Adam Levin, who also announced in early April that the company had furloughed the print publishing staff of Dope and Culture until the pandemic is over; online publications are of utmost importance for the time-being and will continue to run. 

Since cannabis dispensaries in California have been deemed “essential business” amid the COVID-19 pandemic, this deal will surely give the parent company of High Times magazine an opportunity to stay afloat during the economic downturn. Although the company may be missing out on revenue earned from its renowned Cannabis Cup events – due to social distancing rules – it will likely make up for lost revenue by offering take-out and delivery services at Harvest’s former dispensaries.

“We have enormous respect for the Harvest brand and look forward to ushering in the next generation of retail experience with Harvest as a significant shareholder in our company. We look forward to finding a myriad of ways to work with Steve and the team at Harvest,” Levin added.

High Times Holding Corp. has more than 27,000 investors 

The most well-known brand in cannabis’ decision to purchase Harvest’s California dispensaries comes at an important time. Not only has the deal been confirmed amid the coronavirus crisis but also, it emerges in the midst of High Times listing its shares on a national exchange. Over 27,000 investors want dibs on the offering of $50 million, which is still open. While the public shares sold by High Times may not have started trading just yet, some cash has been generated from the share sales; cash will not be listed on the company’s balance sheet until stock trading commences.

Acquiring Harvest dispensaries will essentially bulk-up the vertically-integrated business model that High Times has established through acquisitions. Recently, the cannabis company also revealed that it would be taking possession of California-based cannabis holding company Humboldt Heritage Inc., in addition to its subsidiaries Grateful Eight LLC and Humboldt Sun Growers Guild. Combined, these acquisitions will supply High Times with cannabis cultivation, product manufacturing and processing power from Humboldt County growers have been harvesting plants in this region since the 1960s.

It’s not just High Times that will benefit from the acquisition of Harvest’s California-based retail stores; Harvest will now reap the rewards of becoming a major shareholder in the cannabis business. According to Harvest’s Chief Executive Officer, Steve White, the transaction will enable Harvest to funnel investments into what he describes as “one of the most iconic brands in the industry.”

“As one of the pioneers of the regulated cannabis ecosystem, we have always admired the work of High Times and are excited to watch the High Times brand flourish, as they poise themselves to enter the cannabis distribution and retail spaces,” said White.

High Times’ purchase agreement with Harvest could aid recovery 

In addition to granting High Times the opportunity to bolster the quality of cannabis it provides to dispensary customers, the retail store acquisitions will also amplify the company’s “People’s Choice Edition” of the Cannabis Cup an online version of the famous event. Gaining proprietary rights of the aforementioned company’s dispensaries will simplify the process of handling huge loads of cannabis for submission in the annual Cannabis Cup events.

Furthermore, High Times’ purchase agreement with Harvest and other California-based retail stores could also help it to recover after recurring losses. Back in December, Hightimes Holdings warned shareholders that publication of the famous cannabis magazine could potentially be scrapped due to mounting debts. Moreover, the company was struggling to see a healthy profit. For the six months concluding June 30, 2019, High Times Magazine suffered net losses of $11.9 million; at this point in time, revenue amounted to $10.7 million.

“Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the company’s ability to continue as a going concern for one year from the issuance of the financial statements,” the company said in a statement. 

Fortunately, things have been looking up since this time and in January, High Times Holdings welcomed new chief executive officer Stormy Simon. However, she was replaced by Peter Horvath this May. Horvath is a former chief commercialization officer for American Eagle Outfitters and also boasts experience as the former chief operating officer for Victoria’s Secret. He will also serve as a board member of High Times.