C21 Investments Inc. restructured a previously announced deal to acquire Silver State Relief LLC and Silver State Cultivation LLC, collectively, Silver State.
Silver State is a Nevada-based cannabis business with trailing 12-month revenue of US$25 million.
Canada's C21 Investments will now pay US$39 million in cash and 12.5 million common shares for the acquisition, up by US$5 million and 10 million common shares from the previously agreed terms. A US$14 million three-year convertible note was also canceled from the deal.
The cash consideration comprises US$3 million on or before Dec. 31, the application of US$6 million of deposits previously paid and a US$30 million secure promissory note. The note bears annual interest of 10%, payable in quarterly installments to be amortized over the period ending June 2020.
The stock consideration will be issued on closing and will make Silver State's owner, Sonny Newman, C21 Investments' largest shareholder at 22% interest.
C21 Investments will retain options to acquire a cultivation and processing facility in Sparks, Nevada and a new dispensary in Fernley, Nevada to open this month.
The transaction will be effective Jan. 1, 2019, and will be formally completed upon receipt of approval from the Nevada Department of Taxation, also expected in January 2019.
C21 Investments expects Silver State to establish its competitive position in the Nevada market, and to play into its statewide plan of expanding the cultivation, processing and distribution of branded products.
Vancouver, British Columbia-based C21 Investments cultivates, processes and distributes cannabis and hemp-derived consumer products in the U.S.