Colorado cannabis company Schwazze borrows $95 million to acquire New Mexico cannabis operations

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

Colorado cannabis company Schwazze, which serves as the parent company for a large portfolio of industry brands, has proudly announced a $95 million capital raise to acquire cannabis operations in New Mexico   a deal valued at $42 million.

As per the deal agreement, Denver-based Schwazze’s $95 million capital raise includes $93 million in convertible notes with a 13 percent annual interest rate spanning over five years. 

The company’s assets serve as a safety net for the $95 million capital raise, according to an official news release.

The release states that Schwazze “anticipates using the proceeds from the (notes) to fund the cash consideration of recently announced acquisitions and other growth and expansion initiatives.”

Schwazze’s cannabis acquisitions in New Mexico, which are yet to be finalized, feature “substantially all the operating assets” of Reynold Greenleaf & Associates.

Currently, licensed medical cannabis provider Reynold operates 10 dispensaries, four cultivation sites and one manufacturing facility.

What does Schwazze’s investment in New Mexico cannabis entail?

Elemental Kitchen & Laboratory will be offering equity a “manufacturing asset” to Schwazze as part of the deal. Furthermore, Schwazze’s investment in New Mexico cannabis grants the company the legal right to purchase the licenses of non-profit medical cannabis license holders R. Greenleaf Organics and Medzen Services.

The press release goes on to say that Schwazze’s New Mexico acquisitions will have a monetary value of $42 million $25 million of which will be paid in cash and $17 million that will be paid in the form of a seller’s note. 

The deals are set to close “within the next quarter,” contingent on certain closing conditions and regulatory acceptance.

“With this acquisition, Schwazze will become a multi-state operator with a total of 32 announced and acquired dispensaries, seven cultivation facilities and two manufacturing operations located in either Colorado or New Mexico,” Schwazze noted in the press release.

Schwazze is no stranger to cannabis investments. Within the space of the last year, the for-profit business has snapped up a series of Colorado cannabis assets, including cultivators and retail stores. 

Previously known as “Medicine Man Technologies,” Schwazze’s investment portfolio features Mesa Organics, Star Buds and Purplebee’s. Stock market traders and investors can find the Colorado company trading on over-the-counter (OTC) markets under the ticker “SHWZ.”

New Mexico’s cannabis market is destined for big things 

Cannabis in New Mexico was legalized for recreational use as of June 29, 2021, following the signing of House Bill 2, A.K.A. “The Cannabis Regulation Act,” by Governor Michelle Lujan Grisham on April 12, 2021. Licensed sales are anticipated to begin by April 1 of next year.

The State of New Mexico also boasts a legal medical cannabis market. Former Governor Bill Richardson signed a bill for medical use back in 2007 after the first medical cannabis law enacted by any U.S. state was approved decades later in 1978.

According to Statista, legal cannabis in New Mexico could generate $108.4 million by 2025.