In a world where some cannabis multi-state operators pare down operations, MariMed, Inc. (CNSX: MRMD) (OTCMKTS: MRMD) keeps expanding. With recent disclosed intentions to acquire the operating assets of Ermont, Inc., a medical licensed vertical cannabis operator located in Quincy, MA, the company is firmly entrenched in growth mode. In this new interview, Chief Operating Officer, Timothy Shaw, spoke with TDR to discuss the roadmap ahead in 2023.
Among the many topics discussed was the impending acquisition of Ermont, Inc. The company describes its mission is to provide high-quality laboratory-tested medicine to registered patients in a safe, welcoming environment, while offering medical cannabis products for patients in Massachusetts. The company’s dispensary is located in the Quarry Hills section of West Quincy, directly off the main highway and about 10 miles from downtown Boston.
Should the acquisition close, Ermont, Inc. would provide the company with its third dispensary in Massachusetts—the maximum allowable by state regulations.
And while Marimed does not seek continuity with the cultivation assets, Mr. Shaw states the company sees great value in the Ermont assets for its R&D capabilities:
“With that expansion into the Quincy dispensary, it’s a much larger building than just the dispensary. It was a full vertical for the last company. However, we’ll don’t plan on expanding production—growth production in there. We’re going to be able to take some of the things that take up space—R&D along with our phenol hunting for our great strains—over to that facility and really separate some of the R&D out of production, which is everyone’s dream.”
Last month’s closure of a secured credit facility with Chicago Atlantic Advisors, LLC was also discussed. The $35 million credit facility—with optionality to extend to $65 million—has a three-year maturity and an ability to extend to a five-year maturity under certain conditions. The facility bears interest at a floating rate based on bank prime rate plus 5.75% and includes 30% warrant coverage priced at a 20% premium.
Mr. Shaw reasoned that although MariMed generates enough cash flow organically to grow, the company is seeing distressed assets coming onto the marketplace. The additional cash will allow MariMed to possibly bid for assets that otherwise might be out of reach, allowing it to expand at a faster rate.
The Ermont, Inc. acquisition fits this modus operandi as a value-based addition. Currently, Ermont is in court-ordered receivership, which is a legal process in which a court appoints a neutral third party to disperse the assets. Often times, assets in these proceedings can be acquired at ‘fair’ or below-market value.
To view our previous podcast featuring Co-Founding President of Pelorus Equity Group, Rob Sechrist, click here.