Cannabis Co. Schwazze Enters Cultivation Space With The $11.3M Acquisition of Southern Colorado Growers

Cannabis company Schwazze (OTCQX: SHWZ), previously known as Medicine Man Technologies Inc., revealed Tuesday it will buy the assets of Southern Colorado Growers in Huerfano County, Colorado for $11.3 million.

What Happened

The Denver, Colorado-based company agreed to buy 34 acres of land, which include outdoor cultivation capacity, indoor greenhouse, hoop house as well as cultivation facilities and gear.

Under the proposed deal, Schwazze will pay $6.8 million for the business and $4.5 million for real estate and farm assets. The total sum to be paid amounts to $11.3 million consisting of $5.9 million in cash and $5.4 million Schwazze shares.

The transaction is scheduled to close during the third quarter, subject to standard closing conditions.

Why It Matters

The purchase marks Schwazze’s “first major move into cultivation,” while also expanding its reach across Colorado.

With this acquisition, Schwazze’s Star Buds dispensaries will be directly supplied with premium cannabis, and its PurpleBee's extraction and manufacturing facility will obtain biomass. PurpleBee is said to be the largest supplier of wholesale distillate for the CPG market in Colorado.

What’s Next

After the transaction is finalized, Schwazze intends to add more hoop house facilities in the following four quarters.

"This is just the beginning of our foray into the cannabis cultivation space. We believe our partnership with a premier cannabis cultivator such as SCG will provide our customers with premium quality flower in all of our 17 Star Buds Colorado locations," said Schwazze's CEO Justin Dye. "In addition, this acquisition will dramatically increase our capability to produce a significant amount of biomass for our Purplebee's MIP which, in turn, benefits the entire cannabis industry throughout the state. As a result of this net add to our vertical integration, the acquisition of SCG is expected to provide a healthy positive margin impact for Schwazze.”

Price Action

Schwazze’s shares were trading 1.41% higher at $2.53 per share at the time of writing.

Photo by Sam Doucette on Unsplash