The cannabis company said it had signed a letter of intent to acquire CB Asset Management, a California-based cannabis operator with a 20-year lease on a six-acre property in the Coachella Valley
Mojave Jane Brands Inc () (OTCMKTS:HHPHF) announced a new acquisition Tuesday that will nearly double the cannabis company’s extraction capacity.
The Toronto-based company said it had signed a letter of intent to acquire CB Asset Management, a California-based cannabis operator with a 20-year lease on a six-acre property in the Coachella Valley.
Included in the property is a licensed ethanol manufacturing facility that will boost Mohave Jane’s extraction capacity, as well as distribution licenses and around four acres of cultivation.
READ: Mojave Jane casts eyes on California cannabis market with a new name and ticker
The two companies already shared a building on the property, which will allow Mohave Jane to accelerate integration and ensure operational continuity, the company said in a statement.
Post-acquisition, Mohave Jane and CB Asset Management will be able to produce nearly 170 litres of distillate per month and deliver it to the market in both branded and white label products.
According to Mohave Jane CEO Gary Latham, the demand for high quality, compliant extracts in California far outpaces supply.
“The CBAM acquisition will immediately expand our production capacity, our sales reach, and our team to satisfy that demand and produce meaningful revenue starting now,” Latham said in a statement.
The acquisition will also give Mohave Jane the property to cultivate at a larger scale and provides a base of operations for distribution in the region.
“Having this ‘right-sized’ cultivation site is a key part of our strategy to fully control our supply chain and develop and grow the specific strains that best meet our product requirements,” Latham said.
California dreaming
CB Asset Management’s managing partner Michael Kaplan said both companies have an understanding of the cannabis industry in the Coachella Valley and the state of California and share the same goal of producing high-quality products.
“Becoming a part of this team will allow CBAM to realize our vision of a production-class facility that benefits our customers and the Valley,” Kaplan said. “We are proud to put our asset under their expert management and to work closely with their team to build a larger success story in California cannabis."
The acquisition will be funded through a combination of debt, equity and cash, as well as through an agreement with private company Greensource LLC, which holds the rights to acquire CB Asset Management. Under the terms of the letter of intent between Mohave Jane and CB Asset Management, the rights will be transferred to Mohave Jane.
The acquisition is expected to close within 30 days.
Shares of Mojave Jane opened 1.6% lower at C$0.30 on Tuesday morning in Toronto and were flat on OTC markets at US$0.24.
--Updates with share price--
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