The Cannabist Company Holdings, a multistate operator in the marijuana industry, has announced a deal to reduce its debt and interest by issuing shares to its investors. The deal involves buying back up to $25 million in principal on senior secured convertible notes, which are due in June 2025 and carry a 6% interest rate.
A balance sheet improvement plan
The Cannabist Co. said that the deal is part of its balance sheet improvement plan, which aims to reduce leverage, decrease interest expense, and extend maturities on its debt. The company said that it has a constructive relationship with its investors, who agreed to the transaction.
If the maximum amount of $25 million is repurchased, the company said, the deal could involve issuing roughly 68.6 million shares. This would reduce the outstanding principal on the notes from $75 million to $50 million, and lower the annual interest expense by $1.5 million.
“We are pleased to have reached agreement on the previously announced transaction to reduce leverage and decrease interest expense, maintaining momentum for our balance sheet improvement plan,” Cannabist CEO David Hart said in a statement issued this week. “We are grateful for the constructive relationship with our investors that enabled this transaction to come to fruition and look forward to delivering on additional initiatives in the months ahead.”
A new name and a new CEO
The Cannabist Co. changed its name from Columbia Care in September 2023, after the collapse of Columbia Care’s planned merger with Cresco Labs, another marijuana multistate operator. The company said that the name change reflects its focus on becoming a leading consumer-centric cannabis brand.
The company also appointed a new CEO earlier this month, replacing co-founder Nick Vita, who stepped down to pursue other opportunities. Hart, who joined the company in 2020 as chief financial officer, has over 25 years of experience in finance, strategy, and operations.
The company operates in 18 markets across the U.S. and Europe, with 126 facilities, including 95 dispensaries and 31 cultivation and manufacturing facilities. The company offers a range of products, including flower, edibles, vapes, oils, and capsules, under its own brands and licensed brands.
A competitive and evolving industry
The Cannabist Co. is one of the many players in the U.S. marijuana industry, which is growing rapidly as more states legalize medical and recreational use of cannabis. According to a report by MJBizDaily, the U.S. cannabis industry generated $18.3 billion in sales in 2020, up 40% from 2019, and is expected to reach $24.4 billion in 2021.
However, the industry also faces many challenges, such as federal prohibition, regulatory uncertainty, high taxes, banking restrictions, and market fragmentation. The industry is also undergoing consolidation, as larger companies seek to expand their footprint and scale their operations.
The Cannabist Co. said that it is well-positioned to capitalize on the opportunities and overcome the challenges in the industry, with its diversified portfolio, strong balance sheet, and experienced management team. The company said that it is focused on delivering value to its customers, shareholders, and communities.