General Cannabis to Create Retail Footprint by Acquiring Trees Dispensaries

General Cannabis will change its name to Trees as soon after the closing as practicable, though it will retain its trading symbol CANN.

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April 21, 2021

DENVER, April 21, 2021 (GLOBE NEWSWIRE) -- PRESS RELEASE -- General Cannabis Corp today announced that it has entered into a definitive agreement to acquire Trees, a cannabis retail operator with dispensaries in Colorado and Oregon. The transaction, which is subject to regulatory approval, will provide the company with a foundational retail platform from which to expand growth.

The transaction is the latest milestone for General Cannabis, a Colorado-based company whose strategy is to identify, acquire and operate licensed cannabis facilities in mature markets. Over the last year, General Cannabis became one of the first public companies to receive a suitability approval from the Colorado Marijuana Enforcement Division to acquire licensed cannabis assets, acquired and integrated SevenFive Farm (a 17,000 square foot light deprivation greenhouse outside of Boulder, CO), strengthened its board and management team and completed a series of capital transactions which bolstered its balance sheet and added working and growth capital. In addition to SevenFive Farm, the company operates Next Big Crop, a subsidiary that provides design, consulting and operational services to cannabis cultivation facilities throughout the country. Total revenue for General Cannabis nearly doubled in 2020 from 2019.

Trees currently operates a dispensary in Denver, Colo., and two dispensaries in Portland, Ore. Revenue for the three existing stores was approximately $18 million in 2020. In the coming months, Trees anticipates opening one additional dispensary in Denver and one in Portland, which would bring its total dispensary count to 5 locations. The addition of the Trees footprint will make General Cannabis vertically integrated in Colorado.

Carl Williams, chairman of the board of General Cannabis, said, “This is a transformational acquisition for us. Over the past year, we have strengthened our team and our balance sheet to be able to capitalize on an opportunity like this. When we close this transaction, we anticipate that our consolidated revenue will at least triple. We expect to become cash flow positive from operations as all stores open and ramp. Equally important, we instantly develop a retail foundation and add personnel with deep retail experience.”

When the transaction closes, the senior leadership of Trees will become an important part of the General Cannabis team. Tim Brown, the founder and CEO of Trees, will become a member of General Cannabis’s board of directors and join the executive management team. Trevor Hoffman, co-founder and President of Trees, will also join the executive team. General Cannabis will change its name to Trees as soon after the closing as practicable, though it will retain its trading symbol CANN.

Steve Gutterman, CEO of General Cannabis, said, “Today’s announcement represents a massive step forward in executing on our rollup strategy. In acquiring Trees, we are adding a retail platform that is successful today and will be the backbone of future growth. Tim, Trevor and the Trees team bring incredible depth and know-how. They deeply and passionately care about their customers. And the name ‘Trees,’ which suggests health and growth and nature and, of course, cannabis – and has a passionate fan base – is a perfect representation of our combined vision.”

General Cannabis will acquire Trees for approximately $39.5 million of total consideration, or 2.2 times Trees’s 2020 revenue. Approximately 13%, of this consideration will be paid in cash over 24 months and 87% will be paid with General Cannabis common stock. The Company will issue 38,745,193 shares to Trees shareholders upon closing; the number of shares is calculated by dividing the stock consideration by $0.89 per share, the 15-day volume weighted average price from March 24th – April 14th.

To pay the cash at closing, the Company has expanded its convertible debt round by $2.3 million, to an aggregate of $6.9 million. In total, the Company has raised approximately $10 million over the past nine months. These funds have and will be used to strengthen the Company’s balance sheet and provide capital for growth opportunities like this acquisition.

Trees CEO Tim Brown said, “Everything we do, we do for our customers and without them – and our amazing employees – we wouldn’t be here today. We are excited to join the team because General Cannabis shares our values and our vision. This transaction will allow us to grow – our way. We are excited to bring Trees to more customers and to continue to build a business that is by weed people for weed people.”