Canadian cannabis firm Choom Holdings (CSE: CHOO) (OTCQB: CHOOF) is preparing to take part in the U.S. cannabis market, picking the state of New Jersey as the place to begin its foray.
Shares of the company jumped more than 15% after this announcement.
What Happened
Choom, an adult use cannabis company with one of the largest retail networks in Canada, has signed a letter of intent to purchase an equity interest in a New Jersey-based medical retail dispensary applicant in the state’s upcoming request of applications.
The applicant also wants to enter into the recreational cannabis retail business upon legalization, which is anticipated in 2020.
Choom has signed the agreement through its U.S. subsidiary Choom Holdings USA.
What’s Next
The New Jersey-based medical retail dispensary applicant – or call it NJ Company – is preparing its retail store strategy in New Jersey.
The company expects to receive licenses to operate the maximum allowable cannabis stores for medical and eventually adult use when formally approved by the state.
After getting licenses, the NJ Company intends to create a network of branded stores using Choom’s medical bran called Clarity Medical Centres for its recreational retail stores in the future.
Choom will assist the NJ Company for the buildout and operations of cannabis retail stores and will receive a royalty from the NJ Company for the use of the Choom Brands. Choom’s investment in the NJ Company includes pro-rata rights to maintain its equity interest on future financings.
The terms are not material, according to Choom.
“This is our first step into the United States, and we are very excited for our partnership with this experienced group to have the Choom Brands in New Jersey,” Choom Holdings CEO Chris Bogart said in a statement.
“New Jersey is home to over 9 million people currently being served by only 12 cannabis operators in its medical program. New Jersey is an exceptional market to expand the Choom Brands. We are very impressed with the progress they have achieved to date, and with our expertise in cannabis retail, we are confident we can help them successfully operate in the New Jersey market,” Bogart added.
