On Tuesday, Medicine Man Technologies Inc. (OTCMKTS:MDCL) announced that it had reached an agreement to purchase five cannabis dispensaries from Starbuds in Colorado. This will increase the company’s retail footprint and regional coverage in Colorado.
Dispensaries to cost $31 million : According to terms of the agreement, the dispensaries will cost around $31 million in cash and stock. Medicine Man Technologies will pay around $15.5 million in cash and issue 2.6 million shares of its common stock at $2.98 per share. The deferred cash payment of around $7.75 will have to be settled 12 months after the closing date of the transaction. The company expects the five dispensaries to generate around $19 million this year based on the year-to-date results. EBITDA is estimated to be over $5.6 million.
Andy Williams the CEO and Co-founder of Medicine Man Technologies indicated that the acquisition of the cannabis shops operating under the Starbuds brand will be a major milestone for the company. The CEO indicated that the addition of the five dispensaries to the companies’ Colorado operations will make the company’s vertical supply strategy efficient.
It will also help the company capitalize on the market share through additional retail capacity. The CEO stated that the Starbuds dispensary operations are exceptional in terms of revenue-per-location, brand as well as profit in the cannabis sector.
Starbuds created an exemplary customer loyalty program
Brian Ruden, the managing partner of the dispensaries Medicine Man is acquiring, has vast experience and has garnered brand recognition and industry acclaim for an exemplary customer experience like giving discounts to veterans and cancer patients. Ruden said that he was delighted to be part of the Medicine Man Technologies team. He added with Medicine Man they will be able to create a carefully considered cannabis enterprise that is focused on branding, customer experience, and profitability.
Williams lauded the contribution of Brian and his team for building an enviable brand fully recognized for its award-winning cannabis strains, profitability as well as a successful customer loyalty program.
The five cannabis shops being bought are located in Commerce City, Niwot, Longmont, Pueblo, and Louisville.