Capitalizing on the growing CBD craze, Ontario-based cannabis company Cronos Group Inc. (NASDAQ: CRON; TSX: CRON) is moving into US operations by buying four operating subsidiaries of Redwood Holding Group, LLC.
The international deal is valued at $300 million, with $225 million payable in cash and the remainder in Cronos stock.
Due to close in Q3 2019 if all regulatory conditions are met, the acquisition notably includes the Lord Jones brand of CBD tinctures, body lotions, gumdrop confections, and bath salts that can be found online and in vape shops across the US.
After the deal closes, Redwood and its various subsidiaries will remain with their current branding that customers already know, as well as with the current operational structure put in place by founders Cindy Capobianco and Robert Rosenheck.
Discussing the move into CBD skincare and adult use oral supplements, Cronos Group’s Chief Executive Officer Mike Gorenstein commented:
Redwood and the Lord Jones brand aren’t the only acquisition from Cronos group in recent weeks, with the company also using cash on hand to snatch up a fermentation and manufacturing facility.
That deal netted Cronos an 84,000 sq. ft. Winnipeg-based site formerly owned by Apotex Fermentation Inc.
The site includes fully function labs for microbiology that will be utilized in a recently announced partnership between Cronos and Ginkgo Bioworks, Inc. That partnership’s goal is to produce new forms of cultured cannabinoids for a customer base seeking innovative product types beyond the standard dried flower options.
Like many other licensed producers in Canada, Cronos is gearing up for new regulations to arrive from Health Canada this coming October by inking deals to ensure a steady supply of concentrate for edible and vape products.
Earlier this year, Cronos specifically signed an agreement that sees subsidiary Peace Naturals providing large quantities of dried cannabis to be converted into concentrates by MediPharm Labs Corp.