Canadian firm TerrAscend (CSE: TER) (OTCQX: TRSSF) has signed agreements to purchase ABI SF LLC, which operates a Bay Area cannabis cultivation facility and owns the State Flower brand.

State Flower

State Flower is a California-based cannabis producer operating a licensed facility in San Francisco, Calif. State Flower is focused on a craft approach to cultivation using genetics at an  Envirocann certified facility.

State Flower is known for its ultra-premium cannabis flower and is currently sold through dispensaries in California and Nevada, including The Apothecarium.

Acquisition

TerrAscend has agreed to initially acquire 49.9% of the equity of State Flower for US$2.85 million from the conversion of a previously issued convertible debenture and subject to regulatory approvals. The company also extended a line of credit of up to US$3.75 million to State Flower for cultivation facility improvements to expand production capacity. 

The parties intend to begin the regulatory approval process for the full purchase of State Flower under a securities purchase agreement. TerrAscend also has future rights to use the State Flower brand pursuant to a license agreement.

TerrAscend has agreed to purchase the remaining 50.1% equity of State Flower for consideration based on future revenue over a predetermined 12-month period. The transaction is subject to regulatory approvals by various local and state authorities, as well as certain customary closing conditions.