High Times Buys Pot Retailer Harvest Health, Aims for May IPO

Companies and Brands

Published: April 29, 2020 11:49 am

One of the most recognizable brands in the marijuana sector is High Times, the name of a magazine first published some 45 years ago when legal marijuana sales were virtually inconceivable. Now the venerable brand’s holding company has acquired 13 California marijuana dispensaries from Harvest Health & Recreation for $80 million in cash and stock.

Hightimes Holding’s newly formed subsidiary, HHI Acquisition, is paying $12.5 million in cash and $67.5 million in stock for the California stores. A one-year promissory note for $7.5 million at 10% interest is also part of the payment to Harvest. The deal requires consent from third parties and approval by the California Bureau of Cannabis Control and other regulatory agencies. The deal is expected to close by June 30 unless the parties mutually agree to extend the closing date.

Hightimes first filed for a Regulation A+ initial public offering (IPO) in August of 2018. The crowdfunded deal offered shares at $11 with a minimum purchase requirement of $99. Regulation A+ IPOs allow the company to offer stock valued at up to $50 million in any 12-month period. Hightimes already has received approval to use the ticker symbol HTHC and plans to list the stock on the OTCQX market.

In a filing with the U.S. Securities and Exchange Commission (SEC) last Friday, Hightimes said that the stock portion of the acquisition will be paid in the form of 675,000 shares of Series A voting convertible preferred stock. Dividend payments of 16% annually begin on September 30, 2020. The preferred shares may be converted to common stock at the holder’s option “at a conversion price per share of USD$11.00, subject to adjustment to USD$1.00 per share, based on the previously announced 11-for-one forward stock split of the Hightimes Common Stock to be consummated upon completion of Hightimes’s Regulation A+ initial public offering.”

Earlier this month, Hightimes filed a report with the SEC setting the effective date for the stock split as June 1, 2020. The filing also increased the company’s authorized share total from 100 million to 1 billion and extended the termination date of the IPO to May 15. Hightimes also raised the minimum investment requirement to 50 shares of common stock at $11 per share.

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