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Verano Holdings Announces Completion of Reverse Takeover and Completes Merger with AltMed to Create a Profitable Market Leader in the U.S.

Feb 12, 2021 • 7:03 AM EST
8 MIN READ  •  By Michael Berger
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Verano Holdings Corp. (“Verano” or the “Company”) a leading multi-state cannabis operator, is pleased to announce the closing of a reverse takeover (“RTO”) of Majesta Minerals Inc. (“Majesta”), a reporting issuer in Alberta, Canada and the conditional approval of the Class A subordinate voting shares (the “Subordinate Voting Shares”) of the issuer resulting from the RTO (the “Resulting Issuer”) for listing on the Canadian Securities Exchange (“CSE”).

In connection with the RTO, the previously announced merger transaction (the “Merger”) of Verano Holdings, LLC with Alternative Medical Enterprises LLC, Plants of Ruskin GPS, LLC, RVC 360, LLC and affiliated companies (collectively, “AltMed”), fully-integrated medical marijuana companies operating in Arizona and Florida, has also closed.

Closing of the RTO and Merger

The RTO and Merger were structured as a plan of arrangement under the laws of British Columbia, with certain steps also occurring pursuant to the laws of Delaware. Former securityholders of Verano Holdings, LLC (and of certain Verano subsidiaries) and AltMed received, through a series of transactions, Subordinate Voting Shares and Class B proportionate voting shares (the “Proportionate Voting Shares”) of the Resulting Issuer, which, in the aggregate and on an as-converted basis, constitute approximately 73.84% and 22.48%, respectively, of the Resulting Issuer’s outstanding shares. The remaining shares are held by former shareholders of Majesta (including participants in a financing completed in connection with the RTO) and AltMed’s financial advisor. In addition to the share consideration, the Resulting Issuer will pay certain former AltMed security holders a total of approximately US$35 million in installments. The first US$20M will be paid in cash in connection with the closing and the remaining approximately US$15M obligation will be represented by promissory notes.

The RTO and Merger establishes Verano as one of the three largest multi-state operators (“MSOs”) in the U.S. by 2020 revenue and EBITDA, driven by a portfolio that spans 14 U.S. states, with active operations in 11 U.S. States, including 54 operational retail locations. It also combines management teams that have significant and diverse backgrounds, and bring experience from the pharmaceutical, real estate, manufacturing, agriculture and hospitality industries, which all serve to shape the Company’s premium, comprehensive offerings that encompass both medically-focused and lifestyle products across four CPG brands: Verano, Avexia, Encore and MÜV and two retail store brands: Zen Leaf and MÜV.

In connection with the closing of the RTO and Merger, the following individuals were appointed to Verano’s board of directors: George Archos, Co-Founder and CEO of Verano; Michael Smullen, Chairman, CEO and Co-Founder of AltMed; Cristina Nuñez, Co-Founder and Partner of True Beauty Ventures, LP; and Edward Brown, Chairman of Clear Golf.

“Today marks a significant step in Verano’s evolution and shared vision to be the most innovative and profitable cannabis operator in the country. The combination with AltMed joins two complementary companies focused on providing superior customer experiences. We have both been disciplined operators since inception, and together we anticipate continuing to generate strong profitability and an EBITDA margin that would rank us near the top of our peer group,” said Mr. Archos. “Our public listing will provide us with access to capital to execute our growth plan, including the organic growth of our retail presence and product portfolio in addition to the pursuit of strategic acquisitions, with the goal of being a top three operator in the states in which we operate.”

Mr. Smullen also commented, “We have an enormous opportunity ahead of us for our employees, our shareholders and our consumers. We are excited to combine our teams in Florida and Arizona with Verano’s strategic, multi-state footprint to be able to offer our premium, high-quality MÜV products on more shelves, and scaling both our wholesale and retail operations into new and existing markets.”

Completion of the RTO and Escrow Release

As part of the RTO, the Company implemented a dual class share structure such that the outstanding shares of the Company consist of (i) 125,663,380.6484 Subordinate Voting Shares, and (ii) 1,643,366.1833 Proportionate Voting Shares. Each Subordinate Voting Share carries one vote per share and each Proportionate Voting Share carries 100 votes per share.

In connection with the RTO, among other things, 10,000,000 subscription receipts (the “Subscription Receipts”) were issued by 1276268 B.C. Ltd., a special purpose financing vehicle created for the purpose of the Subscription Receipt offering (the “Offering”). The Subscription Receipts were indirectly and automatically exchanged for Subordinate Voting Shares upon completion of the RTO and the satisfaction of other escrow release conditions. The Offering raised US$100 million with a pre-money valuation of US$2.8 billion. Certain proceeds from the Offering of the Subscription Receipts were placed into escrow (the “Escrowed Proceeds”) upon completion of the Offering as disclosed in the Company’s press release dated January 21, 2021. The Escrowed Proceeds were released from escrow and ultimately received by the Company in connection with the consummation of the RTO and the Merger.

Verano received conditional approval from the CSE for the listing of the Subordinate Voting Shares under the symbol “VRNO”. The Subordinate Voting Shares are expected to begin trading on the CSE at market open on February 17, 2021. The Proportionate Voting Shares will not be listed for trading on the CSE but may be converted into Subordinate Voting Shares in certain circumstances.

“Our public listing will provide us access to capital to execute our long-term strategy of expanding into limited-license, high-growth markets and scaling our wholesale and retail operations into new and existing markets,” added Mr. Archos. “Since Verano’s inception, we have maintained a disciplined focus on profitable growth, and we have established a solid foundation which will allow us to achieve our goal of delivering industry-leading EBITDA margins and sustainable value to our shareholders.”

For further details on the Company and the listing transaction, including the RTO and the Merger, please refer to the Company’s listing statement which will be available on the Company’s profile at www.sedar.com.

About Verano

Verano, profitable since inception, is a leading vertically-integrated multi-state cannabis operator in the U.S. An operator of licensed cannabis cultivation, processing and retail facilities, Verano is devoted to the ongoing development of communal wellness by providing responsible access to regulated cannabis products to the discerning high-end customer. The Company’s portfolio encompasses 12 U.S. States, with active operations in nine, which includes 23 active retail locations and approximately 440,000 square feet across its six cultivation facilities. Verano produces a full suite of premium, artisanal cannabis products sold under its trusted portfolio of consumer brands: Encore, Avexia and Verano. Verano designs, builds and operates inimitable Zen Leaf branded dispensary environments that deliver a superior cannabis shopping experience in both medical and adult-use markets. Learn more at http://verano.holdings/

About AltMed

The MÜV brand of medical cannabis infused products launched in Arizona in 2016 and quickly gained international attention and recognition. MÜV Dispensaries by AltMed Florida was formed a year later through the partnership of AltMed Enterprises and Plants of Ruskin, a multi-generational Florida agricultural leader. Through continual research and development, MÜV has received multiple patents for its award-winning MÜV Products line that provides quality, consistent and reliable medical cannabis products to patients at all 31 locations (one in Arizona muv-az.com, 30 in Florida muvfl.com, and more added each month). Patients are encouraged to place reservations online at muvfl.com for in-store pickup, order for delivery, or visit any one of the MÜV dispensaries for alternative medical cannabis medicine you can trust.

Forward Looking Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information and forward-looking statements contained herein may include, but are not limited to, information concerning the ability of the Company to successfully become listed on the CSE or achieve its business objectives and integrate the operations of the combining companies, expectations regarding financing, and expectations for other economic, business, and competitive factors.

Although Verano believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward- looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information or forward-looking statements that are contained or referenced herein, except as may be required in accordance with applicable securities laws. All subsequent written and oral forward- looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice regarding forward-looking information and statements.

***

Contacts:

Investors
Verano Holdings
Aaron Miles
Head of Investor Relations
aaron@verano.holdings

Media
Verano Holdings
David Spreckman
Sr. Director, Corporate Communications & Retail Marketing
david@verano.holdings

Financial Profiles
Verano Holdings
Debbie Douglas
Senior Vice President
ddouglas@finprofiles.com
949-375-3436

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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