A vertically integrated California cannabis company is investing millions in one of the top growers in the state.
The investment is through a private placement offering by Mercer Park Brand Acquisition Corp.
In April, Mercer announced that it was entering into a definitive agreement to acquire Glass House and related assets for US$567 million.
Glass House currently produces more than 110,000 pounds of cannabis flowers annually on more than 500,000 square feet of cultivation space.
The grower aims to expand to up to 6 million square feet of cultivation space.
Glass House, which operates four licensed dispensaries in California, recently acquired two additional retail licenses in Santa Barbara County.
Additionally, Glass House has entered into an agreement to merge with 17 in-process licenses from Element 7 for a total of 23 retail locations by 2022.
“These partnerships are a fantastic opportunity to secure long-term access to over 900,000 pounds of high-quality, low-cost, California-grown cannabis for use across our expanding portfolio of branded products,” says TPC CEO Steve Allan. “Our focus over the last 100 days has been to continue to scale up our supply chain. Our strategic investment accomplishes two important components, gaining access to Glass House’s greenhouse-grown cannabis at attractive pricing and expanding the distribution of our products to their network of retail stores.”
Mosaic.Ag is a consortium of experienced cannabis farmers.
TPC says it will facilitate the acquisition with $17 million in cash and common shares in company capital.
The company expects the cultivation acquisition to close in Q2 2022, pending closing conditions and regulatory approvals.
Allan says that TPC’s strategy for vertical integration in California required locking in long-term, low-cost cultivation to meet the demand for branded products in its wholesale and direct-to-consumer channels.
“With Glass House and Mosaic.Ag added onto our existing large-scale indoor grow, we will have successfully grown our cultivation foundation, setting us up to have a scale and margin advantage for years to come,” says Allan. Additionally, having a long-term retail partnership with Glass House is expected to continue to enable our brands to maximize consumer awareness and availability in California.”
TPC has also entered into a cultivation and supply agreement where the consortium will continue to provide cultivation services and supply the company with high-quality cannabis.
The cultivation acquisition will provide a turnkey operation and immediate access to cannabis supply that TPC can use in its branded product lines.
TPC says that the partnership will offer expansion opportunities in the future as consumer demand continues to grow.