At the end of September, the board of directors for British Columbia-based medicinal marijuana company Veritas Pharma Inc. (CSE: VRT) approved a private placement to raise new capital.
Today, Veritas announced the private placement has officially closed, selling slightly more than 8 million shares for a total of $1.56 million raised.
The final amount fell nearly a million shy of the company’s original plan to raise $2.5 million at a price of $0.19 per share when the private placement was initially announced to shareholders on Sept. 20.
Furthermore, the company just announced a 10 to 1 consolidation of all remaining Veritas shares.
$1.25 million of the funds acquired through the private sale will be utilized to buy a stake in a Kelowna marijuana grow facility currently under construction. That amount will be used to buy 25% of the 10,000 square foot greenhouse, which was licensed under Health Canada Access to Cannabis for Medical Purposes Regulations.
Following the close of the private placement deal, Veritas Chief Executive Officer Dr. Lui Franciosi issued a press release with this statement:
“The closing of this financing and the share consolidation provide Veritas with the opportunity to not only secure clients for its new cannabis testing services, it also will provide the company with the necessary positive ongoing cash flow for the continued research, development and commercialization of cannabis strains specific to pain management and treatment of specific diseases.”
The new growing facility funded through the placement is expected to begin production operations within 12 weeks.
Additional greenhouse space has been constructed at a rapid pace across Canada since the passage of the Cannabis Act, with some companies even turning to portable grow spaces in converted shipping containers.
Investment agreements and private stock sell-offs have been a recurring theme as companies seek to expand in the wake of Canadian marijuana legalization. With demand at all-time highs, supply remains low on both the medicinal and recreational sides.
Most recently, Body And Mind Inc. (CSE: BAMM, OTC: BMMJ) raised capital earlier this week by selling off $8 million in shares to Australis Inc.