Ottawa-based CannaRoyalty is buying 180 Smoke – a vape shop chain with 15 outlets in Ontario – in a $40 million deal, the marijuana company said Thursday.
CannaRoyalty said in a statement it is purchasing 180 Smoke for $25 million, and an additional $15 million upon completion of certain targets by Dec. 31, 2020.
“The 180 Smoke management team has built a growing, profitable retail and online vape business along with several strong in-house brands in a fragmented, competitive and highly regulated marketplace,” Afzal Hasan, president of CannaRoyalty, said in a release.
“We expect to be in a position to rapidly leverage 180 Smoke’s existing platform and additional cannabis locations to drive sustainable, accretive growth in the Canadian market.”
180 Smoke and its subsidiaries, including 420 Wellness, currently have 26 locations in Canada that sell vaping, nicotine-related products and parts. CannaRoyalty said it expects the “vast majority” of 180 Smoke’s retail portfolio to be eligible for retail cannabis sales after marijuana becomes legal on Oct. 17.
The vape chain’s revenue grew more than 50 per cent in the eight months to August from a year ago to $6.78 million, CannaRoyalty said.
CannaRoyalty’s acquisition comes after Ontario introduced legislation Thursday governing the licensing and regulation of the province’s private cannabis retail model, which is scheduled to be in place by next April.
Marijuana for vaping – along with other pot products like edibles and beverages – will remain outlawed when Canada legalizes the drug next month.