Yahoo Finance High Times Plans Flagship Retail Stores, Clearing Way to Sell Cannabis through Dispensaries
Deals Signed with Holders of Dispensary Licenses in Los Angeles and Las Vegas
High Times announced it will open two flagship retail stores offering cannabis under dispensary licenses, giving the strongest brand in the marijuana industry a new engine of growth as it prepares for a public listing.
Formally known as Hightimes Holding Corp., the owner of the eponymous magazine and operator of Cannabis Cup events has signed binding letters of intent with holders of dispensary licenses in high-traffic locations in Las Vegas and Los Angeles. The new locations will provide a cross-marketing opportunity, both with the High Times and Cannabis Cup brands. The stores will sell logo memorabilia, licensed products, and a variety of cannabis products, including local strains that have won Cannabis Cup awards.
“These Cannabis Cup winners are heroes,” High Times CEO Stormy Simon told IPO Edge in an interview. “We will allow them to be recognized with a dedicated space in our new stores.”
The decision to enter the dispensary business comes as many small operators have struggled to keep up with larger players such as MedMed Enterprises Inc., Harvest Health & Recreation, Inc., Medicine Man Technologies, Inc., and Terra Tech Corp. By purchasing or partnering with mom-and-pop dispensaries, High Times can elevate businesses to a higher competitive plane using its brand power and industry expertise.
In an interview with IPO Edge, High Times Executive Chairman Adam Levin said that the company is focused on Ebitda-positive stores. The new locations may be acquired through a combination of both cash and shares of High Times, which remain available to all investors through a portal here.
“Having the second mover advantage in this industry, combined with the present downturn in the cannabis capital markets, provides unique timing for High Times to help non-branded stores to differentiate themselves from the industry’s larger multi-state operators,” Mr. Levin said.
High Times plans to continue looking for more dispensaries to purchase. Those may include locations in states where cannabis is recreationally legal such as California and Nevada as well as states such as Florida and New York where it is prescribed for medicinal purposes.
“Even medicinal states can make sense for us,” Ms. Simon said. “High Times was publishing medicinal articles back in the 70s and 80s so the brand is well known in that community.”
In conjunction with the dispensary news, High Times also announced the appointment of Paul Henderson, former CEO of Grupo Flor, as the organization’s President. Mr. Henderson successfully built Salinas, CA-based East of Eden, one of the top-selling Cannabis stores in the state. Prior to running Grupo Flor, Mr. Henderson ran business units at The Goldman Sachs Group, Inc. General Electric Company’s GE Capital, and Apple Inc.
Until now, High Times had focused mainly on being a media company. Like many other companies in the industry, High Times avoided “touching the plant” to ensure it could comply with all regulators and comply with listing rules on certain stock exchanges. Companies that do handle cannabis directly tend to list on Canadian exchanges or trade over the counter in the U.S., indicating that may be where High Times shares trade first.
The company has sold shares to roughly 27,000 investors in an offering of up to $50 million which remains open until March 31. Some of the shares sold have generated cash that won’t appear on the company’s balance sheet until the stock begins to trade.
In addition to the share offering, High Times converted $28.6 million of debt to equity. That transaction dramatically reduced the company’s leverage and gave it scope to acquire some complimentary businesses. For instance, High Times bought Spain’s Spannabis conference last year for $7 million.
The company also recently acquired DOPE Media for $11.2 million. DOPE has regional publications along with Dope Cup events that complement Cannabis Cup events. Hightimes also bought Buyers Industry Guide, owner of the BIG Show industry conferences. The B2B tradeshows gather twice annually in Miami and Los Angeles with over 10,000 industry guests annually.
High Times’s revenue rose 21% in the six months through June 2019, driven largely by a jump in publishing and advertising revenue.
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