CannaRoyalty said it purchase 180 Smoke for C$25 million, and an additional C$15 million upon completion of certain milestones by Dec. 31, 2020.
“As a management team, we are drawn to business models that can be rapidly and profitably scaled with the addition of each new customer, brand and dollar of capital, and 180 Smoke fits this formula. The 180 Smoke management team has built a growing, profitable retail and online vape business along with several strong in-house brands in a fragmented, competitive and highly regulated marketplace,” said Afzal Hasan, president of CannaRoyalty, in a release.
“We expect to be in a position to rapidly leverage 180 Smoke’s existing platform and additional cannabis locations to drive sustainable, accretive growth in the Canadian market,” he added.
180 Smoke currently has 15 locations in Toronto that sell vape and nicotine-related products.
"This deal will give 180 Smoke access through CannaRoyalty to the additional capital and expertise both to execute on those plans as well as to become a force in cannabis retail and brands, together," said Ashutosh Jha, president of 180 Smoke.
180 Smoke's revenue grew more than 50% in the eight months to August from a year ago to C$6.78 million.
The acquisition of 180 Smoke comes on the heels of recently-introduced legislation by Ontario in regards to the regulation of private cannabis retail model, which is expected to be rolled out in April.
Shares of CannaRoyalty were down 1.4% at C$7.14 in Toronto and down 0.5% at US$5.54 in New York.