Green Growth to Acquire Arizona’s Desert Rose


Green Growth Brands (CSE: GGB) (OTCQB: GGBXF) said that it agreed to acquire control of ZLJT LLC and Arizona Natural Pain Solutions, better known as Desert Rose.

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The company will pay around $12.35 million in cash under the terms of the agreement.

Desert Rose holds a license for a vertically-integrated operation in Arizona, including retail, cultivation and infusion (kitchen).

“We were very impressed with the quality of the operations held by Arizona Natural Pain Solutions,” Green Growth CEO Peter Horvath said in a statement. “At Desert Rose, the team is dedicated to providing their customers with medical marijuana products that are pure, safe, and efficient while striving to keep their costs as affordable as possible. This strategy fits perfectly with our plans to grow the world’s premier cannabis retailing business.”

Desert Rose was founded in August 2016 and has grown to serve nearly 400 patients per day.

Desert Rose specializes in top-tier flower, vape pens, concentrates, edibles and tinctures. It offers a loyalty program where customers earn back 1% of their purchases to be spent in the dispensary.

“The retail operations at Desert Rose fits our stated strategy of favoring large sales volume with high-productivity assets,” Horvath added. “Our vision of Green Growth Brands is to be a multi-state operator with stores averaging USD$15 million to USD$20 million in annual sales, driven by per square foot sales in excess of USD$10,000. This is what our first assets in Nevada and this store in Arizona have achieved.”

Currently, the state of Arizona restricts cannabis consumption for medical use but appears to be moving towards legalizing recreational use. According to the Arizona Department of Health Services, marijuana sales in the state reached almost 122,000 pounds in 2018, a 41% increase over 2017, with over 186,000 registered medical marijuana patients as of December 2018.

The acquisition is expected to close this month, subject to regulatory approval, customary conditions of closing and the satisfactory completion of due diligence by the company.

Meanwhile, Green Growth said that it acquired Just Healthy, which holds provisional certificates of registration for a registered medical marijuana dispensary, cultivation, and processing site in Northampton, Mass.

Under the terms of the purchase agreement, Green Growth issued 1,741,244 common shares at C$3.39 per share, representing a 15% discount to the closing market price on the Canadian Securities Exchange on December 11, 2018.

In connection with the acquisition, Green Growth elected to exercise an option to purchase land in the Northampton, Massachusetts, area for $700,000. The land is the future site of the cultivation facility.

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