Plus Products Acquires Option to Purchase California Based Oil Manufacturer
SAN MATEO, Calif., June 06, 2019 (GLOBE NEWSWIRE) — Plus Products Inc. (the “Company” or “PLUS”) (CSE:PLUS) (OTCQX:PLPRF), today announced that it has acquired an option to purchase Emerald Bay Wellness LLC, a California-based cannabis oil manufacturer. The option grants PLUS the irrevocable right, but not the obligation, to purchase all of the business assets of Emerald Bay Extracts for cash and stock consideration.
Strategic Highlights
- Emerald Bay Extracts is currently one of PLUS’s largest suppliers of cannabis oil and has been a supply partner to PLUS for over a year.
- If the option is exercised, the acquisition would give PLUS in-house cannabis extraction capabilities that would both improve quality control and increase gross margins on the core edibles business, while creating a new revenue stream and new product development capabilities.
- The California cannabis market is rapidly shifting towards manufactured products requiring cannabis oil including vapes, concentrates, and edibles. These manufactured products made up 56% of all retail sales in Q1 2019, up from 49% in Q1 2018 according to BDS Analytics. California is the largest cannabis market in the world, projected to be $5.6B of retail sales in 2022 (according to Arcview Market Research / BDS Analytics).
Transaction Details
- A secured loan of $400,000 will be delivered to Emerald Bay Extracts as consideration for the option.
- If the option is exercised, consideration for the acquisition would include the issuance of approximately 1.2M subordinate voting shares of PLUS, $250,000 in cash, and Emerald Bay would not be required to repay the loan detailed above.
- Approximately 70% of the deal consideration would be subject to performance targets including revenue, which totals to nearly $28M over the course of the 2 year earn-out period.
Management Commentary
Acquiring Emerald Bay would give PLUS the opportunity to directly interact with the cannabis plant as we work to unlock the many benefits it is capable of delivering. We targeted this acquisition because it allows us to reap the benefits of vertical integration while maintaining a focus on product manufacturing.
Jake Heimark, Co-founder and CEO of PLUS
Beyond the benefits of internalization, we believe that the team at Emerald Bay, possess the professionalism and know-how to rapidly scale their wholesale oil business under our umbrella of resources. Ultimately, this is a rare opportunity to improve quality control, cut costs, and grow revenues all at the same time.
About Plus Products
PLUS creates low dose and delicious cannabis food products that enhance the everyday lifestyle. PLUS’ mission is to use nature to bring balance to people’s lives – that starts with high-quality, precisely dosed products that deliver consistent experiences. PLUS’ food products, which include gummies and mints in a variety of delectable flavors, are manufactured at PLUS’ own factory in Adelanto, CA, where dosage is tested twice internally and then tested twice again by an independent lab. PLUS is headquartered in San Mateo, CA with 80 employees.
PLUS supports regulation in the cannabis industry and actively collaborates with regulators. The company recently rolled out child-resistant tins a year ahead of the California deadline, and it participates regularly in the National Cannabis Roundtable with John Boehner as honorary chairman.
About Emerald Bay Wellness
Emerald Bay Wellness LLC is a California-based cannabis extraction company that develops and manufactures quality cannabis oils and concentrates. The company sources cannabis input material throughout California and supplies wholesale cannabis oil products to branded product manufacturers across fast growing verticals including edibles, topicals, and vapes. Under its own in-house brand, Emerald Bay sells its own line of vape products to California dispensaries.
