Ottawa-based CannaRoyalty is targeting the high-end cannabis market with its latest acquisition, all the while deepening its hold in the lucrative California pot space.
The cannabis investment firm acquired licensed producer FloraCal earlier this week at the cost of $1 million and 3.5 million shares of CannaRoyalty (CSE:CRZ). That price will increase by up to $3 million and additional shares in the coming years if and when FloraCal meets certain milestones in expanding its production facilities. (All figures in USD unless otherwise noted.)
The California-based producer grows a “premium” brand of cannabis, according to a press release, which retails for an average $17 per gram. CannaRoyalty notes that it will also be able to license these high-quality strains globally.
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CEO Marc Lustig, who recently told OBJ that he’s bullish on the California cannabis market, said in a statement that he believes FloraCal’s high-end brand will elevate its overall value.
“We see (FloraCal’s) success in the discerning California market as evidence that branded flower that is truly differentiated occupies an important place in the cannabis industry,” he said.
FloraCal saw $6.4 million in revenues in fiscal 2017, and is slated to more than quadruple its production area in the coming years. CannaRoyalty expects the acquisition to close by the end of Q2 2018.
Earlier this week, CannaRoyalty also closed its previously announced fundraising round. Investors exercised an over-allotment option, bringing the total financing to C$17.25 million.
CannaRoyalty has had a strong week on the Canadian Securities Exchange, as its share price has risen 80 cents, or 22 per cent, since last Thursday. The firm opens trading on Apr. 20 at C$4.47.