Level Brands Inc. (NYSE: LEVB) shares jumped on Tuesday after the company announced that it would be acquiring Cure Based Development, the owner, operator and manufacturer of nationally recognized consumer cannabidiol (CBD) brand cbdMD.

This will take place in a two-step merger-for-merger consideration of 15,525,000 shares of Level Brand’s common stock, with an earnout potential of up to an additional 15,525,000 shares if net revenue targets aggregating $300 million are met within 60 months of the closing date.

Cure Based Development began reporting revenues in 2018, and for the eight months ended August 31, 2018, reported revenue of $3.2 million, and in October 2018 it had monthly sales exceeding $1.0 million. Cure Based Development’s current product offerings include gummies, tinctures, topical, bath bombs, oils and pet products.

The closing of the merger is subject to a number of customary conditions precedent as well as both the passage of the Agricultural and Nutrition Act of 2018, which, when approved by the President of the United States, contains a permanent declassification of CBD as a controlled substance under federal law.

Martin A. Sumichrast, board chair and chief executive of Level Brands, commented:

With the passage of the 2018 Farm Bill, CBD will no longer be listed as a Schedule 1 controlled substance which we believe will open the access to national retailers for CBD consumer products. We believe that the next three to five years will produce a few leading CBD brands, and our goal is to be the leader in the space.

Shares of Level Brands were last seen up 10% at $4.24, in a 52-week range of $2.74 to $8.48.

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