One of Canada’s largest cannabis retail franchises, Sessions Cannabis, has been acquired by Item 9 Labs Corp. for CAD$16.4 million. Known to invest in cannabis-related business the Arizona-based company agreed to buy Wild Card Cannabis which owned Sessions Cannabis.
On top of the fee there are additional potential earn-out payments, according to a regulatory filing. These earn-out payments—the first of which is due one year the closing date and the second after two years—could add an extra $8.2 million in stock to the deal.
In the country’s largest cannabis market, Ontario, Sessions Cannabis has 43 outlets with annual sales topping CAD$70 million from 18 franchisees. These numbers are quite common as most franchisees tend to be multi-unit owners. Sessions Cannabis is also one of the fastest-growing and largest cannabis retailer in Ontario. Which isn’t surprising for the cannabis industry when you consider that as of May 2 Ontario had 1,468 licensed cannabis stores open for business, with hundreds more applications waiting in the pipeline, raising concerns about a potential glut of retailers.
“We have amazing multi-unit franchisees and a solid franchise system that is dedicated to their success,” Sessions CEO and co-founder Steven Fry said in press release following the announcement of the deal. “But to further innovate within the industry and expand our reach, we need the right partner. We believe we have found that with Item 9 Labs Corp. and their franchise brand, Unity Rd.”
When Cannabis Retailer reached out to Fry for comment he responded by saying: “Bringing together leading cannabis retailers in Canada and the United States is transformative for the industry. The acquisition significantly increases our depth of bench with an experienced team that has a track record of not only building national franchise brands but also a deep knowledge in cannabis. The combination of best practices across both teams will create an even more robust franchise network across North America and one of the largest international cannabis companies. Our combined franchise network comes to more than 40 franchisees who are dedicated to providing high-quality cannabis products to their local communities. We anticipate more opportunities and economies of scale as the newly merged company drives franchise growth across Canada.”
Phoenix-based Item 9 Labs said the deal would add to its franchise system.
“We are serious about accelerating our growth and opening the doors for more prospective entrepreneurs to enter the complex cannabis space. Acquiring one of Canada’s largest cannabis retailers is a great milestone for our team and demonstrates our ability to close large transactions,” said Mark Busch, Item 9’s vice president of mergers and acquisitions, in a press release.