Cannabis distributor and accessories Humble & Smoke Inc. (CNSX: HMBL) (OTCMKTS: HUMBF) and private equity fund Green Acre Capital Distribution Corp. have formed a joint venture that will focus on the distribution of cannabis across the United States.
The joint venture, called HC Solutions Holdings Inc., will initially expand Humble’s cannabis distribution operations into California.
“Humble is excited to launch into the California market, offering something new to cannabis brands in this region,” Humble CEO Joel Toguri said in a statement. statement.
Humble invested US$8 million in the joint venture, while Green Acre invested US$2 million for a 20% stake.
Green Acre financed its investment through an option agreement with Johnson Brothers, an American distributor of wines, spirits and beers.
Read more: 48North and Humble & Fume Launch Cannabis Lab 2.0
Read more: Supreme Cannabis Launches Value Brand Hiway
In November, Green Acre completed a US$8 million private placement to acquire 15.23% of Humble through an option agreement with Johnson Brothers, with a letter of intent providing for an additional $2 million for the formation of the joint venture.
“This investment by Johnson Brothers, through their option agreement on Green Acre, is a critical step in our expansion into the United States,” Toguri said at the time. “We are actively executing our growth strategy, which includes the previously announced agreement to acquire licensed California cannabis distributor, Cabo Connection.”
Green Acre can increase its stake in the joint venture to 50% by investing up to an additional $8 million over the next two years.
“The additional $2 million investment by Johnson Brothers, funded through their Green Acre option agreement, demonstrates continued support for our US expansion strategy,” Toguri said.
California is currently one of the largest adult-use markets in the world, worth approximately US$4.4 billion and is expected to double over the next 10 years.
“We are actively executing our growth strategy,” Toguri said. “As our business evolves and grows, we continue to be hyper-focused on generating sustainable earnings and positive cash flow to deliver long-term shareholder value.”
Humble & Fume stock fell about 13% on Tuesday to $0.23 on the Canadian Stock Exchange.