Almost every cannabis stock took a beating this year, and we’re always looking for good stories or deals in the space to pick up on the cheap.
Canadian cannabis distributor Humble & Fume Inc. (HUMBF, HMBL.CN) just announced completion of an $8 million private placement from Green Acre Capital Distribution Corp. The deal saw 18,795,471 common shares placed at a price of C$0.53 per share, representing 15.23% of issued and outstanding common shares of Humble on completion.
The cannabis stock is currently trading on the CSE at C$0.60/share and OTC at USD$0.48/share.
There’s some good news here as the agreement will give the Canadian Cannabis distributor inroads into new markets, starting with California. Moreover, the deal charts new territory for a lucrative marriage between adult beverage and legal cannabis distribution.
Joel Toguri, CEO of Humble & Fume, put it this way to Forbes magazine “We are actively executing on our growth strategy, which includes the previously announced agreement to acquire licensed California cannabis distributor, Cabo Connection. As our business evolves and expands, we continue to be hyper focused on sustainable profit generation and positive cash flow to deliver long-term shareholder value.”
As Toguri points out, “The Johnson Brothers investment, through Green Acre, is transformative for the legal cannabis distribution market in North America. This investment is one of the first of its kind by an adult beverage distributor, as more traditional company’s explore opportunities to access the cannabis market,” Toguri explained.
In addition, an LOI suggests that Green Acre will also provide an additional $2 million in equity to form a joint venture with Humble. An LOI likewise reveals that Green Acre will contribute another $10 million of capital on a non-dilutive basis to bring its stake in the collaboration to 50 percent.
That’s a vote of confidence from a major player in the adult beverage space.
“Johnson Brothers investment with Green Acre and Humble is the first of its kind in North America,” said Shawn Dym, Principal with Green Acre Capital and Chairman of Humble & Fume.
“As the legal cannabis market matures, Humble is looking to model itself after the distribution and sales experience and infrastructure from other established industries, like beverage alcohol, food and even the medical services. The U.S. cannabis distribution opportunity is expected to exceed $15 billion following federal legalization and Humble is well positioned to capitalize,” said Dym.
Humble & Fume Inc. began as a supplier of cannabis-related accessories before expanding into dispensaries in Canada and now have operations in the United States. With its entrance into the US cannabis distribution market, the firm is experiencing tremendous development.
The company serves 85% of Canada’s cannabis retailers, as well as several Licensed Producers (LPs) and government partners. Humble & Fume distributes primarily cannabis and accessory items made by other public names such as Supreme Cannabis, Fire & Flower, and 48North.
Working with over 200 industry brands, the firm also just introduced its own FUME extracts vape brand. A proprietary extraction technique used by FUME that removes terpenes from the plant without the use of solvents ensures a pure product.
Humble & Fume Inc. generated $61 million in revenue last year. The firm has been expanding its distribution to the United States, and according to Dym, revenues are expected to rise by around 50% this year.
For more on cannabis stocks and investing, check out our Cannabis Investing 101.