iAnthus Capital expands portfolio with US$17.3mln Valley Agriceuticals acquisition

iAnthus Capital Holdings Inc (CSE:IAN, OTCQB:ITHUF) announced a deal to buy Valley Agriceuticals for US$17.3mln, expanding its portfolio into five regulated cannabis states in the USA.

Valley has received conditional approval from the New York state health department to be granted one of just 10 medical marijuana licences for the state.

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The proposed acquisition includes Valley’s cultivation campus, including 136 acres for cannabis cultivation and a 6,500 sq ft cultivation and processing facility.

It expects to supplement this facility with a planned Phase 2 expansion of a 14,500 square foot hybrid greenhouse, shown to lower the cost of production compared to typical indoor cultivation.

Valley Ag plans to produce medical-grade marijuana deliverable through oils, pills, inhaler pens and bring them to customers via vertically integrated dispensaries.

“Having watched the development of the Canadian cannabis market up close, we are seeing striking similarities between where New York is today and where Canada was a year ago, with comparable patient numbers and a limited number of competitors,” said Julius Kalcevich, iAnthus’s chief finnacial officer.

“The main difference we are seeing is that New York is experiencing significantly faster patient growth, indicating that New York State could potentially be one of the largest medical marijuana markets in the US,” added Philip Green, chief financial officer of Valley Ag.

“With a population of nearly 20 million residents, a rapidly growing patient base, and only ten medical cannabis licenses, New York is an ideal market for iAnthus to enter,” said Randy Maslow, president of iAnthus.

“The addition of chronic pain to New York’s list of medical cannabis indications, as well as existing qualifying conditions such as Parkinson’s disease and multiple sclerosis, has made the medicine available to a very large group of patients in New York.”

 iAnthus will acquire Gloucester Street Capital, and its wholly owned subsidiaries -  Valley Agriceuticals LLC and Valley Agriceuticals Real Estate LLC, for US$17.3 million.

That includes US$2.3mln payable in cash and US$15 mln payable in iAnthus shares atUS$2.00 each.

Up to an additional five mln iAnthus shares may be issued to Valley Ag shareholders conditional upon Valley Ag achieving 15,000 active patient registrations by December 31, 2020.

The transaction remains subject to a number of conditions, including New York State Department of Health regulatory approval and is expected to close during the third quarter of 2017

Story by ProactiveInvestors