High Tide has purchased popular retailer Grasscity in a deal worth C$6.7 million ($5 million), giving it access to a huge community of cannabis smokers.
Grasscity is based in Amsterdam, The Netherlands, and is the world’s largest ecommerce site for cannabis accessories. Bongs, dab rings, bubblers, pipes, vaporizers, grinders, rolling papers, and other parts and accessories are all on offer, making it around 65,000 sales per year.
High Tide said that Grasscity receives 5.8 million site visits per year, has 1.1 million email recipients on its database and has 260,000 social media followers. The Calgary-based firm has also bought the Grasscity forum, which boasts 34 million unique users and 75 million annual page views.
Raj Grover, the founder, president and chief executive of High Tide, called Grasscity “an iconic company with nearly 20 years of invaluable brand equity in the cannabis industry”. It has created a Dutch subsidiary called High Tide Inc. B.V. and that will now take over the management of the Grasscity business.
High Tide will issue 8,410,470 special warrants at a deemed price of $0.50 per special warrant and automatically convert to common shares of High Tide to complete the transaction, while taking on loan repayments. Both companies’ boards have unanimously approved the deal and it is expected to go through by the end of 2018.
“High Tide was our preferred purchaser all along the way, because of its management team, business model and future growth plans, said Filip Ernest, co-founder and chief executive at Grasscity.
Ernest has agreed to become the managing director at High Tide Inc. B.V. and lead the company for the next two years.
Grasscity is based in Amsterdam, a global cannabis hotspot, but it generates 90% of its revenue from American customers. It generated C$5.7 million in revenue in 2017 and held 49% in gross margin. In the first nine months of 2018, it was enjoying 35% year-on-year revenue growth, while gross margin was up 31%, High Tide said.
It has improved its margins by selling more private label accessories alongside its range of branded goods, while also improving its ecommerce offering and back-end logistical operations. High Tide believes it can now help Grasscity make greater inroads in North America and Europe and it said it sees “tremendous prospects for growth”.
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