Nabis Holdings Inc (CSE:NAB) (OTCMKTS:NABIF), the cannabis investment company, said Tuesday it was narrowing its focus on acquiring assets that fit its vertically integrated strategy and has terminated its deal to buy Desert’s Finest dispensary in Desert Hot Springs, California.
The US$5.6 million acquisition was first announced in June last year, with revised terms announced in October.
"Given the downturn in the Cannabis industry, capital markets are no longer helping fuel growth, resulting in the company narrowing their focus on acquiring assets that fit into our vertically integrated strategy," Shay Shnet, Nabis Holdings' chief executive said in a statement.
"Although the Desert’s Finest acquisition was a great opportunity for us to enter the California Cannabis market, acquiring a stand-alone dispensary no longer fits into our strategic plan."
The firm added that ending the deal results in US$1.9 million of cash conservation and no further share dilution.
Chief operating officer Mark Krytiuk said that Nabis remained " focused on improving operations and profitability at the recently acquired Emerald Dispensary in Phoenix as well as the Infusion Edibles line of medicated products".
"We are continuing to make progress on building out the 'Camp Verde' facility in Arizona, a 44,000 square foot cultivation, production and fulfillment facility that has also secured all available hemp license classifications," he added.
Management has previously said that it expects the Arizona dispensary and infusions operations to report about US$9 million in top-line revenue annually, based on unaudited internal financial statements for the nine month period to September 30 last year.
The California deal had included a 6,000 sq foot dispensary in Desert Hot Springs with more than 40,000 registered patients and tallied annual sales of US$5.7 million in 2018.
Nabis was to acquire 100% ownership of Desert’s Finest for a total consideration of US$5.6 million, which comprised US$1.9 million in cash and US$3.7 million in a 1 year convertible note.
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