Private Placement and Strategic Investments Totalling Approximately $4.5 Million Position Specialty Retailer and Franchisor Spiritleaf for July 2018 Recreational Cannabis Legalization
CALGARY, Feb. 8, 2018 /CNW/ -Inner Spirit Holdings Ltd. ("Inner Spirit" or "the Company"), a specialty retailer and franchisor establishing recreational cannabis dispensaries across Canada under the Spiritleaf brand, today closed the final tranche of its previously announced private placement (the "Private Placement"), for gross proceeds of approximately $4.5 million. In addition to achieving the important milestone of securing 100 franchise agreements, the Company also provided an update on its recent agreements with Cannabis Wheaton Income Corp. (TSX-V: CBW) and Grenville Strategic Royalty Corp. (TSX-V: GRC-X).
"We have made tremendous progress since November, nearly doubling the number of recreational franchise agreements to our goal of 100 before expected legalization in July this year," said Darren Bondar, CEO of Inner Spirit. "We are delighted to see increasing interest from entrepreneurs, investors and distributors who want to participate in our development of an iconic Canadian recreational cannabis brand. Our franchisees have committed to contribute up to $45 million collectively to open Spiritleaf stores across Canada, in markets where private distribution will be legal. This month, we secured two strategic investments as well as an experienced partner that provides Inner Spirit with access to inventory from a network of 15 licensed producers.
"As we approach the expected recreational cannabis legalization date, our focus will be on identifying additional supply agreement opportunities and developing our premium house brands. Funded in part by the proceeds from our recently completed Private Placement, we plan to establish a corporate flagship location in Calgary in mid-2018, while we explore additional fundraising opportunities to support our longer-term growth strategy.
"With our initial financing complete, a proven retail franchise model and strong strategic relationships in place, we are well-positioned to become a leading retail chain in the prospective recreational cannabis market."
100 Recreational Cannabis Franchise Agreements
Inner Spirit has more than 100 franchise locations in various stages of development across those jurisdictions in Canada that have announced that the private sale of recreational cannabis will be permitted. The Company will employ the funds raised from its Private Placement, strategic investment and alliance with Cannabis Wheaton Income Corp. ("Wheaton") and Grenville's equity investment to build out its flagship corporate dispensary in Calgary, Alberta, develop its Spiritleaf brand, and support the rollout of its franchise partners once the private sale of recreational cannabis is permitted.
Cannabis Wheaton Income Corp. Alliance and Increased Strategic Investment
On January 9, 2018, Inner Spirit entered into an investment agreement and a strategic alliance agreement with Wheaton. Pursuant to the investment agreement, Wheaton acquired 15,000,000 common shares of Inner Spirit, representing approximately 18.5 percent of Inner Spirit's total issued and outstanding common shares at the time. In exchange for the common shares, Wheaton made a cash payment of $350,000, and issued 674,418 Wheaton common shares and 1,250,000 Wheaton common share purchase warrants to Inner Spirit. On February 6, 2018, Wheaton exercised its right to acquire an additional 1,500,000 Inner Spirit common shares for $150,000 and now holds approximately 15 percent of the total issued and outstanding Inner Spirit common shares.
Inner Spirit also entered into a strategic alliance agreement that grants Wheaton the exclusive right to supply up to 50 percent of Inner Spirit's annual inventory requirements for any cannabis, cannabis-infused or cannabis-derived products to be sold at its retail dispensaries with a mutually agreeable profit-sharing arrangement relating to any such cannabis product sales.
On January 22, 2018, Inner Spirit reached an agreement with Grenville to convert Grenville's$1 million royalty agreement with a wholly-owned Inner Spirit subsidiary to 10 million Inner Spirit common shares. As a result of this agreement, Grenville now holds 14,455,000 Inner Spirit common shares or approximately 13 percent of the total issued and outstanding common shares of Inner Spirit.
About Inner Spirit Inner Spirit is applying its successful retail franchising model to the recreational cannabis market. The first and only Canadian cannabis company to be granted Canadian Franchise Association Membership, Inner Spirit is establishing a chain of recreational cannabis dispensaries under its Spiritleaf brand, with the vision of becoming an iconic Canadian brand, and the nation's leading recreational cannabis retail chain. Spiritleaf aims to be the most knowledgeable and trusted source of recreational cannabis, offering a premium consumer experience with its own brand of high-quality products.
About Wheaton Wheaton Income is a collective of entrepreneurs with a passion for the cannabis industry past, present and future. Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.
About Grenville Based in Toronto, Grenville Strategic Royalty Corp. is a publicly-traded royalty company that makes investments in established businesses with revenues of up to $50 million dollars. Grenville generates revenues from royalty payments, buyouts from contracts and equity returns. The non-dilutive royalty financing structure offered by Grenville competes directly with traditional equity to meet the long-term financing needs of companies on more attractive commercial terms.
Forward Looking Statements: Except for the historical information presented herein, matters discussed in this release may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. In particular, there is no assurance that the Canadian provincial governments will permit the sale of recreational cannabis at all or if so, subject to what regulatory framework, or that recreational cannabis use will be legalized in Canada in July 2018 or at all.
SOURCE Inner Spirit Holdings
For further information: Investor Enquiries: Darren Bondar, Chief Executive Officer, (403) 930-9303, [email protected]; Franchise Enquiries: Courtney Richer, Franchise Relations, (403) 930-9300, [email protected]