High Tide Inc. (Nasdaq: HITI) (TSXV: HITI) is jumping into the German medical marijuana program by buying 51% of Purecan GmbH, for approximately €4.8 Million and will have a future option to acquire the remaining interest in the company.
The deal is expected to close in a matter of weeks. The deal is comprised of €2.4 million in common shares of High Tide priced at C$4.53 multiplied by the Bank of Canada’s CAD to EUR rate as of January 7, 2025, of C$1.4871, for a total of 792,126 shares. In addition to the shares, Purecan will receive €1.2 Million in cash which looks to be attached to a €1.2 Million in a promissory note. The company statement said that the note will mature two years after the closing date, bear 7% annual interest (paid quarterly), and be prepayable at any time by the company with no penalty. In August 2024, the company nabbed a C$15 million line of credit to support growth initiatives.
According to the company statement, Purecan is a profitable, import-oriented pharmaceutical wholesaler based in Germany, that holds a license to import medical cannabis into Germany. The company is also preparing to launch a telemedicine portal for medical cannabis patients in Germany, along with complete warehousing and logistics infrastructure.
“By acquiring a 51% stake in Purecan, including its European wholesale and import license, its fully built warehousing and logistics infrastructure, and in-development telemedicine platform, we are strategically positioned to leverage our robust networks and relationships with Canadian licensed producers,” said Raj Grover, Founder and Chief Executive Officer of High Tide. “With almost half of all German medical cannabis imports coming from Canada, this acquisition paves the way for us to emerge as a leading supplier of medical cannabis from Canada into Germany, potentially replicating our market share success in Canada.
Germany passed the Consumer Cannabis Act in April 2024 and has been importing much of its medical marijuana from companies in Canada. According to “The German Cannabis Report” released this past October by Prohibition Partners, a London-based data and market intelligence company, medical cannabis sales in Germany were expected to exceed €420 million this year and are on pace to reach €1 billion by 2028. The same report found that sales of medical cannabis in Germany had increased by 30% in the third quarter of 2023 and accelerated even further after the passage of Germany’s.
“Since our very first meeting with Raj and the High Tide team a few months ago, it became apparent to us that there were significant cultural and operational alignments between our companies. Given that demand for medical cannabis in Germany is currently outpacing supply, this merger provides Purecan with a unique opportunity to tap into High Tide’s unmatched procurement expertise and relationships with Canadian licensed producers who currently provide half of all medical cannabis imports into Germany. We look forward to a fruitful partnership between our two teams to create long-term value for all stakeholders involved,” said Dr. Ehsan Omari, Chief Medical Officer, Purecan GmbH.
High Tide last reported earnings in September when Green Market Report wrote that the company posted revenue of C$131.7 million (US$96.9) for the quarter, passing the Yahoo Finance average estimate of US$94.35 million. The new record was a 6% rise from both the previous year and quarter. Net income reached C$800,000, compared with a C$3.6 million loss in the same period last year.
High Tide announced two new stores opening in December hitting its goal with 29 new stores opening in 2024.
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