Denver-based Medicine Man Technologies entered into a binding term sheet Aug. 12 to acquire Dabble Extracts as part of the company’s larger strategy to operate in segments of the entire cannabis supply chain, according to CEO Andy Williams.
“Right now, our goal is to partner up the best of the best in all the different verticals of cannabis, so we’re completely vertically integrated with the best operators, the best products [and] the best know-how in the country,” Williams told Cannabis Business Times.
The company kicked off 2019 with an agreement in January to acquire MedPharm Holdings LLC, an intellectual property development and holding company focused on cannabis research and product development. Just days after that announcement, Medicine Man Technologies announced plans to acquire Medicine Man Denver, a Colorado licensee that operates an indoor cultivation facility and four retail locations.
In June, Medicine Man Technologies announced its acquisition of Los Sueños Farms, a Colorado-based cultivator, and Purplebees, an infused products manufacturer and dispensary, which Williams said helped the company secure not only a hefty supply of cannabis, but also extraction capabilities to turn that raw material into product lines.
“We have all levels of cultivation with greenhouse, outdoor [and] indoor [facilities], so that we can supply all areas of those market segments, not only [with] flower, but also products that we can create from the extraction,” Williams said.
Following the Los Sueños and Purplebees news, Medicine Man Technologies launched an expansion into Colombia with the acquisition of Green Equity S.A.S., which offered the company additional licenses and intellectual property for cultivation, manufacturing, extraction, exportation and R&D.
Through each acquisition, Medicine Man Technologies identified and targeted the leaders in each market segment, Williams said, and Dabble Extracts is no exception.
“Dabble stood out from the rest in terms of the shatter and wax that they create from hydrocarbon extraction,” he said. “They are an annual award winner of many different [extraction] competitions. … [They are capable] of producing undetectable amounts of … [residual] solvents and high-quality, high-terpene, high-purity concentrates that are very attractive to the consumer. … And, of course, Josh Hindi, the founder of Dabble, is a pioneer in the industry and brings tremendous experience to our team.”
Colorado’s cannabis industry is a tight-knit community, Williams said, and companies are very aware of other business’s capabilities and reputations, which helped the Medicine Man Technologies team identified Dabble Extracts as an attractive target.
“This industry competes against each other very hard, just like any industry does, but most of us are very close friends,” he said. “The reason for that is we’ve had to build the industry. We’ve had to fight for it, we’ve had to protect it and grow it together.”
Medicine Man Technologies agreed to purchase Dabble Extracts for $3.7 million, which consists of $750,000 in cash and the balance in shares of common stock, according to a company press release.
Dabble Extracts’ products are currently sold in about 60 stores and the company brings in over $3 million in revenue, Williams said. The Medicine Man Technologies team will work to grow that business, he added, increasing the distribution network to 700 stores in Colorado.
As Medicine Man Technologies continues to roll Colorado’s cannabis pioneers into its team, Williams said the company will be able to better compete in a growing, more consolidated marketplace, which was set in motion, in part, by Colorado HB19-1090, which was signed into law by Gov. Jared Polis earlier this year to allow greater investment flexibility in cannabis businesses. The legislation goes into effect Nov. 1 and essentially allows cannabis licensees to be owned by publicly traded companies. Medicine Man Technologies will apply for regulatory approval of its acquisitions in November and close the transactions in the ensuing months.
The other catalyst was Dye Capital’s $21 million investment into Medicine Man Technologies, Williams added.
“We needed the legal framework and then we needed the right investment partner to be able to bring the best and the brightest of Colorado into one place,” he said. “As soon as we had those two in place, we started announcing six acquisitions that are right now pending to be closed as soon as after November, when House Bill 1090 goes into effect. … Dabble is just one of the pieces to the puzzle that’s missing in the great picture. »