Trulieve Announces the Largest US Cannabis Transaction; Acquisition of Harvest Health & Recreation Inc., Creates the Most Profitable Multi-State Operator in the World’s Largest Cannabis Market

Combined Company Will Maintain Industry Leading Scale in Retail, Cultivation & Production

Footprint Provides National Scale with a Deep Regional Focus in Attractive Markets

Expanded Runway for Growth with new Southwest Hub and Expanded Northeast and Southeast Hubs

Combined Consensus 2021E Revenue of $1.2 Billion

 

FLORIDA & ARIZONA: Trulieve Cannabis Corp. and Harvest Health & Recreation Inc. announce they have entered into a definitive arrangement agreement pursuant to which Trulieve will acquire all of the issued and outstanding subordinate voting shares, multiple voting shares and super voting shares of Harvest. Under the terms of the Arrangement Agreement, shareholders of Harvest will receive 0.1170 of a subordinate voting share of Trulieve for each Harvest subordinate voting share (or equivalent) held, representing total consideration of approximately $2.1 billion based on the closing price of the Trulieve Shares on May 7, 2021.

Trulieve, a leading multi-state operator with a focus on the northeast and southeast regions of the United States, and Harvest, a leading multi-state operator with a focus on the west coast and northeast regions of the United States, have built deep, vertically integrated operations in their key markets, becoming leading operators in the United States, the world’s largest regulated cannabis market.

Upon completion of the Transaction, as well as the closing of other previously announced acquisitions by Harvest and Trulieve, the combined business will have operations in 11 states, comprised of 22 cultivation and processing facilities with a total capacity of 3.1 million square feet, and 126 dispensaries serving both the medical and adult-use recreational cannabis markets.

Key Transaction Highlights and Benefits

  • Increases Scale Across Our Hub Markets – through the creation of the largest U.S. cannabis operator on a combined retail and cultivation footprint basis;
  • Creates the Most Profitable US MSO – with combined 2020 Adjusted EBITDA of $266 million1,2 and combined 2021E consensus Adjusted EBITDA3 of $461 million, delivering an unparalleled platform for continued growth;
  • Delivers a Superior Existing Retail and Distribution Model – from a robust retail network of 126 dispensaries across 11 states, the combined company will have leading market shares in Arizona and Florida;
  • Strong and Expanding Multi-State Presence – bolsters Trulieve’s expansion in US northeast and southeast hubs in Florida, Pennsylvania and Maryland, and establishes a southwest hub in core markets including Arizona, where recreational adult use of cannabis was recently legalized;
  • Optimizes Nationwide Presence – through well-established retail and wholesale channels across markets, as well as the ability to reach an estimated total addressable market of US$19.3 billion in 2025E (Arcview market estimate);
  • Adds Premium Brands – to Trulieve’s portfolio of in-house brands and national brand partners with a successful line of products across multiple form factors;
  • Leverages Expert Operating Teams and Best Practices – from each of Trulieve and Harvest, enhancing operational excellence by combining unparalleled knowledge of, and success in winning, state license application processes and the ability to rapidly bring operations to market; and
  • Accretive Transaction Reinforces Trulieve’s Leading Financial Metrics – by reinforcing superior financial performance relative to peers through industry-leading margins and strong projected profitable growth.

Management Commentary

“Today’s announcement is the largest and most exciting acquisition so far in our industry, creating the most profitable public multi-state operator.  Importantly, our companies share similar customer values with a focus on going deep in core markets. This combination offers us the opportunity to leverage our respective strong foundations and propel us forward with an unparalleled platform for future growth,” stated Kim Rivers, Chief Executive Officer of Trulieve. “Harvest provides us with an immediate and significant presence in new and established markets and accelerates our entry into the adult use space in Arizona. Trulieve and Harvest are leaders in our markets, recognized for our innovation, brands, and operational expertise with true depth and scale in our businesses. We look forward to providing best-in-class service to patients and customers on a broader national scale as we create an iconic US cannabis brand.”

“We are thrilled to be joining Trulieve, a company that has achieved unrivaled success and scale in its home state of Florida,” said Steve White, Chief Executive Officer of Harvest.  “As one of the oldest multi-state operators, we believe our track record of identifying and developing attractive market opportunities combined with our recent successful launch of adult use sales in Arizona will add tremendous value to the combined organization as it continues to expand and grow in the coming years.”

Terms of the Transaction

The Transaction will be effected by way of a plan of arrangement pursuant to the Business Corporations Act (British Columbia). Under the terms of the Arrangement Agreement, Trulieve will acquire all of the issued and outstanding Harvest Shares, with each Harvest Shareholder receiving 0.1170 of a Trulieve Share for each Harvest Share, implying a price per Harvest Share of US$4.79, which represents a 34% premium to the May 7, 2021 closing price of the Harvest Shares. After giving effect to the Transaction, Harvest Shareholders will hold approximately 26.7% of the issued and outstanding pro forma Trulieve Shares (on a fully-diluted basis). The Exchange Ratio is subject to adjustment in the event that Harvest completes certain interim period refinancing measures, with the potential adjustment in proportion to the incremental costs from such financing relative to the Transaction value. Additional details of the Transaction will be described in the management information circular and proxy statement that will be mailed to Harvest Shareholders in connection with a special meeting of Harvest Shareholders expected to be held in the third quarter to approve the Transaction.

The Transaction has been unanimously approved by the Boards of Directors of each of Trulieve and Harvest. Harvest Shareholders holding more than 50% of the voting power of the issued and outstanding Harvest Shares have entered into voting support agreements with Trulieve to vote in favor of the Transaction.

The Arrangement Agreement provides for certain customary provisions, including covenants in respect of non-solicitation of alternative transactions, a right to match superior proposals, US$100 million reciprocal termination fees under certain circumstances and reciprocal expense reimbursement provisions in certain circumstances.

The Transaction is subject to, among other things, the approval of the necessary approvals of the Supreme Court of British Columbia, the approval of two-thirds of the votes cast by Harvest Shareholders at the Special Meeting, receipt of the required regulatory approvals, including, but not limited, approval pursuant to the Hart–Scott–Rodino Antitrust Improvements Act, and other customary conditions of closing. Approval of Trulieve Shareholders is not required. Additional details of the Transaction will be provided in the Circular.

The Board of Directors of Harvest has unanimously determined, after receiving financial and legal advice and following the receipt and review of a unanimous recommendation of a special committee of independent directors, that the Transaction is in the best interests of Harvest, and that, on the basis of the Fairness Opinion (as defined herein), that the consideration to be received by the Harvest Shareholders is fair, from a financial point of view, to the Harvest Shareholders.

The Harvest Board unanimously recommends that Harvest Shareholders vote in favor of the resolution to approve the Transaction. The Special Committee obtained a fairness opinion from Haywood Securities Inc., which provides that, as at the date of such opinion and based upon and subject to the assumptions, procedures, factors, limitations and qualifications set forth therein, the consideration to be received by the Harvest Shareholders pursuant to the Transaction is fair, from a financial point of view, to the Harvest Shareholders.

High Times Announces Acquisition Of 13 California Retail Assets From Harvest

The World’s Most Recognized Cannabis Brand Expands Portfolio into the World’s Largest Cannabis Market

CALIFORNIA: Hightimes Holding Corp., the owner of High Times, the most well-known brand in cannabis, announced the execution of a definitive agreement to acquire certain equity and assets with respect to 13 planned and operational California dispensaries from Harvest Health & Recreation Inc. . The mostly stock-based transaction, upon successful closing, will allow Hightimes Holding Corp. to enter the retail sector and enable Hightimes Holdings to become one of the largest branded cannabis retailers in California overnight.

Hightimes Holdings intends to fully transform the cannabis retail stores to become High Times® destinations. Hightimes Holdings plans to revamp the existing design and rebrand each dispensary to fit the High Times® aesthetic and experience, rebranding them with the iconic High Times logo which consumers have grown to recognize over nearly five decades.

Consummation of the transaction is subject to certain closing conditions, including the receipt of certain regulatory third-party consents. The parties are aiming to close the acquisitions no later than June 30, 2020, subject to the parties’ mutual agreement to extend the closing date.

“We’ve long supported Harvest and the other cannabis-retail-trailblazers as they pushed forward despite changing legislation, insurmountable licensing fees, political stigma and, frankly, through a process that was designed to be difficult,” said Adam Levin, Hightimes Holding Corp.’s Executive Chairman. “We have enormous respect for the Harvest brand and look forward to ushering in the next generation of retail experience with Harvest as a significant shareholder in our company. We look forward to finding a myriad of ways to work with Steve and the team at Harvest.”

Harvest Health & Recreation Inc is a vertically integrated cannabis company and multi-state operator in the U.S. Since 2011, Harvest has been committed to expanding its retail and wholesale presence throughout the U.S., acquiring, manufacturing, and selling cannabis products for patients and consumers in addition to providing services to retail dispensaries.

“This transaction allows Harvest to invest in one of the most iconic brands in the industry,” said Steve White, Harvest’s Chief Executive Officer. “As one of the pioneers of the regulated cannabis ecosystem, we have always admired the work of High Times and are excited to watch the High Times brand flourish, as they poise themselves to enter the cannabis distribution and retail spaces.”

The deal comes in the final days of Hightimes Holding Corp.’s Regulation A+ IPO campaign. Investors interested in becoming a shareholder are encouraged to visit hightimesinvestor.com to view the High Times offering circular.

Harvest Will Be Awarded Ohio Medical Marijuana Processor License

ARIZONA:  Harvest Health & Recreation, a vertically integrated public cannabis company with one of the largest footprints in the U.S., announced the Ohio Department of Commerce, pending background checks, will award the company a provisional processor license under Ohio’s Medical Marijuana Control Program. The application scored among the top 26 after being judged on a series of standards and merits, including relevant experience across multiple verticals in the cannabis space, prior demonstration of compliance, financial viability and proposed community benefits. With the win, Harvest will hold a processing license, a tier 1 cultivation license and three retail dispensary licenses in Ohio, making it the only multi-state operator to be organically vertically integrated in the state. Harvest holds over 60 licenses nationally, expanding its national footprint across 12 U.S. states.

“Ohio has an important long-term role in the cannabis industry,” said Steve White, founder and CEO of Harvest. “It has the seventh largest state economy, a skilled manufacturing workforce and a growing patient count. We are thrilled to open fully vertical operations, and look forward to contributing to the Buckeye economy for years to come. This is a solid win for us coming on the heels of big retail victories in Pennsylvania and Santa Monica, California.”

Founded in 2011 in Arizona, Harvest is now one of the only consistently profitable, vertically integrated cannabis companies in the U.S. The company brings together in-house cultivation, manufacturing, retail facilities, construction, real estate and technologies, backed by experienced finance, compliance, operations, real estate, human resources, marketing and legal teams, who have a proven and trusted track record in writing applications and working in the cannabis industry. With more than 525 employees, Harvest plans to continue to grow its operations across the U.S. throughout 2019 and beyond.

An international leader in the cannabis industry, Harvest holds itself to the most stringent health, safety and quality standards in the industry when it comes to the growth, production and sale of cannabis medicines and products for consumers. Since its founding, the company has donated more than $500,000 to veterans, seniors, children, patients-in-need and other charitable recipients.