IONIC Brands’ (CA:IONC / US:ZRRRF) latest move may be the most important yet.
IONIC has been on an acquisition tear since the company went public a few months ago.
The company has announced the acquisition of an edibles company with distribution in dispensaries in Illinois, Washington, Colorado and Massachusetts.
It also announced it was going to acquire an extraction company in California, the world’s largest legal cannabis market.
It signed a Letter of Intent to acquire British Heritage Brand Astley's Of London.
It acquired patents for cannabis-infused coffee.
And it inked a distribution deal with a leading cannabis product distributor in California which provides products to more than 500 dispensaries in the state.
But, in the long run though, IONIC may have just made its biggest move yet.
Great Products Are Good, Great Distribution Is Better
IONIC just announced a deal to acquire Vegas Valley Growers.
It’s a win/win for IONIC really.
This acquisition brings a market-leading cannabis product and established distribution network in an entirely new market into IONIC’s broadening portfolio.
The deal expands IONIC’s product line up while giving it new distribution avenues for its established products.
Vegas Valley Growers is an established company in the Nevada cannabis industry and owner and distributor of its Vegas M Stick, a high-end cannabis vape pen.
The M Stick is a big seller too. IONIC expects the Vegas Valley Growers acquisition to add $6.6 million in top-line revenue this year alone.
All good stuff. But here’s the exceptional part of this deal.
The Vegas M Stick has earned 75% market penetration in the state.
This shows the success of the Vegas M Stick as a brand, but also shows how broad of a distribution network Vegas Valley Growers has built.
The latter part – the distribution network – may be the most valuable asset of all in this deal.
Any company looking at the long-term future of the cannabis industry should be in Nevada.
Now, we realize Nevada is a small state by population. With a little over three million residents, it’s only less than one-tenth the population of California.
But for branding, Nevada is becoming increasingly valuable.
In its first year since it went fully legal in July 2017, Nevada’s cannabis companies racked up $530 million in revenue.
That’s not all from native Nevadans. A big part is from tourism.
Las Vegas attracts more than 40 million visitors each year and many of them have tried the now-legal cannabis on offer in the city.
Getting to these customers is essential to building a valuable nationwide brand for cannabis products.
By acquiring an established company in Nevada with millions in sales, a successful product, and deep market penetration, IONIC is right where it needs to be.
Eye On The Prize
IONIC Brands is building a broad foundation for future growth in the cannabis industry.
It has only been public for a few months, but it has made multiple strategic acquisitions to expand its product line up and its geographic footprint into multiple new state markets.
The race for building branded products in the cannabis industry is still wide open.
The companies which will be the big winners are focusing on building brands for its products and geographic expansion.
IONIC Brand’s broadening portfolio will go a long way to giving it the potential to grow into a future cannabis industry powerhouse.
If you’re looking for growth, IONIC Brands (CSE:IONC / OTCQB:ZRRRF) is still in the early stages of its rapid growth trajectory.
The Seed Investor
READ FULL RELEASE BELOW
IONIC Brands Corp., formerly Zara Resources Inc. (CSE: IONC; FRA: IB3) is pleased to announce that it has completed the acquisition of Vegas Valley Growers North (“VVG”) located in Las Vegas, Nevada, previously announced on April 2, 2019. VVG is a vertically-integrated, cash flow positive opportunity with a projected 2019 revenue of US$6.6 million, expected gross profits of US$3.1 million and EBITDA of US$2.0 million.
According to Arcview Market Research and Nevada State Department of Taxation, medical and adult-use spending on cannabis is projected to be over US$400 million in 2019 and US$500 million in 2020. Sales records were set during the first six months of 2018 where Nevada sold more than US$195 million in cannabis products compared to US$67 million in Washington State and US$114 million in Colorado in the same period.
IONIC BRANDS Chairman and CEO John Gorst commented, “The Nevada cannabis market is one of the cornerstone markets in the U.S. for building cannabis brands. With over 42 million visitors to Las Vegas per year, the VVG acquisition will provide our IonicTM vape and ZootsTM edibles brands valuable exposure to national and international cannabis consumers. The VVG acquisition includes the popular Nevada vape brand: “Vegas M Stick”. VVG offers Ionic Brands vertically integrated operations and distribution into over 75% of Nevada stores.” VVG’s CEO, Mitch Wilson commented that, “IONIC vape pens are the perfect complement to the Vegas M Stick. Together, these luxury brands are set to have a massive presence in the Nevada market for years to come.”
The VVG acquisition includes the lease for a 1,700 square foot production facility, situated on 3.42 acres of land. VVG is currently building a 60,000 square foot manufacturing facility with expected completion date of Q3 2019. A second 80,000 square foot facility is planned for Q4 2019. The VVG acquisition also includes four state licenses in hand for cultivation and manufacturing for both medical and recreational cannabis. The applications for the medical and recreational cannabis distribution licenses are being processed and are anticipated to be granted in Q2 2019. In 2018, VVG revenues were US$2.6 million, with an EBITDA of US$0.8 million. VVG’s flagship product is the Vegas M Stick and the Reno M Stick branded vape pens that have current market penetration of over 75% of stores in Nevada. The Company expects to increase sales of Ionic branded products by leveraging off VVG's existing distribution pipeline and introduce various Ionic product SKUs to this distribution channel.
The total purchase price for VVG is US$8,870,000 (C$11,885,800) that includes a cash payment of US$7,620,000 (C$10,134,600), and 2,814,180 common shares of the Company at $0.5952 per share for an aggregate total value of USD $1,250,000 (C$1,675,000). The issuance of shares is subject to approval by the Board of Directors and the CSE.
Share Purchase Warrants
The Company also announces that, pursuant to the loan agreement with Top Strike Resources Corp. (“Top Strike”), it has issued 2,600,000 share purchase warrants to Top Strike upon repayment of the loan totaling C$3.25 million and associated fees of C$286,000. Each warrant is exercisable at C$0.55 per share for a period of one year from the date of issuance.
The board of directors of the Company approved the settlement of C$63,262 of an outstanding debt through the issuance of common shares of the Company to an arm’s length party (the “Debt Settlement”). Pursuant to the Debt Settlement, the Company would issue up to 140,582 common shares of the Company at a deemed price of C$0.45 per share.
About IONIC Brands Corp
IONIC BRANDS is a national cannabis holdings company based in Washington, led by a team of successful entrepreneurs. The company is focused on building a multi-state consumer-focused cannabis concentrate brand portfolio focusing on the premium and luxury segments. The cornerstone Brand of the portfolio, IONIC, is an accomplished #1 vaporizer brand in Washington State has aggressively expanded throughout the west coast of the United States and is currently operating in Washington, Oregon and California. IONIC BRANDS’ strategy is to be the leader of the highest-value segments of the cannabis market and expand nationally.
ON BEHALF OF THE BOARD OF DIRECTORS
CEO and Director
For inquiries, please visit www.ionicbrands.com, by email firstname.lastname@example.org or call investor relations at 253-248-7920 (option 4).
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The CSE does not accept responsibility for the adequacy or accuracy of this release.
All statements, other than statements of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. The risks are without limitations: the price for cannabis and related products will remain consistent and the consumer demand remains strong; availability of financing to the Company to develop the retail locations; retention of key employees and management; changes in State and/or municipal regulations of retail operations and changes in government regulations generally. Important factors that could cause actual results to differ materially from the Company’s expectations are disclosed in the Company’s documents filed from time to time with the Canadian Securities Exchange, the British Columbia Securities Commission, the Ontario Securities Commission and the Alberta Securities Commission.
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