Lucy Scientific Acquires High Times Intellectual Property, Including Existing Licensing Agreements in All-Stock Transaction
September 07 2023 - 8:00AM
Lucy Scientific Discovery Inc. (“Lucy” or “the Company”) (NASDAQ:
LSDI), a leading psychotropic innovator announces the acquisition
of the intellectual property (IP) of High Times, the most
recognizable and iconic brand in the cannabis industry. This
acquisition provides a stream of high-margin licensing and royalty
income from the well-regarded High Times, Cannabis Cup, and 420.com
brands, including their respective domain names.
Lucy will issue 19.9% of its outstanding stock to High Times and
make payments semi-annually for the next 5 years based on EBITDA
generated from the acquired IP, which can be settled with either
stock or cash at Lucy’s option. Additionally, Lucy will license the
right to operate retail stores and manufacture and sell THC
products in the United States back to High Times, in return for a
license fee of $1.0M per year, increasing to $2.0M per year upon
Federal legalization. The transaction is subject to customary
closing conditions and is expected to close within two
weeks.
Lucy will be acquiring brand rights with plans to monetize the
IP through current and planned royalty agreements by further
extending and enhancing the existing domestic and international
licensing arrangements currently held by High Times, including
consumer products and merchandise. The Company intends to preserve
the essence of the High Times, Cannabis Cup, and 420.com brands
while identifying new avenues for growth and development.
The Company expects the acquisition of High Times IP, including
the 18 licensing agreements across various product categories it
will acquire, to add at least $10M of revenue and $5M of EBITDA to
its 2024 results and provide a solid foundation of growth as
cannabis becomes legal around the world.
Richard Nanula, CEO and Executive Chairman at Lucy Scientific
Discovery Inc., commented, "Lucy expects this acquisition to drive
high margin revenue quickly and sustainably across the cannabis
sector around the world. This is a great opportunity to grow the
market presence of the nearly 50 year old High Times brand globally
through licensing and online distribution. We are confident that
this opportunity can add significant value for our
shareholders.”
Adam Levin, Executive Chairman of High Times added, “Over the
past few years, we have been building the consumer products
offerings for High Times and there is no better partner than Lucy
to drive our iconic brand forward. This transaction will open
up tremendous new opportunities to grow and expand the High Times
brand led by Richard Nanula, who has decades of experience with
some of the biggest consumer brands and companies in the world. We
are delighted to become large Lucy shareholders.”
About Lucy Scientific Discovery Inc.Lucy
Scientific Discovery Inc. (NASDAQ: LSDI) is a Nasdaq-listed company
with holdings and operations in a variety of psychotropic
businesses. The company holds a Controlled Drugs and Substances
Dealer's License granted by Health Canada's Office of Controlled
Substances. Lucy Scientific Discovery Inc. and its wholly-owned
subsidiary, LSDI Manufacturing Inc., operate under Part J of the
Food and Drug Regulations promulgated under the Food and Drugs Act
(Canada). This specialized license authorizes LSDI to develop,
sell, deliver, and manufacture pharmaceutical-grade active
pharmaceutical ingredients (APIs) used in controlled substances and
their raw material precursors. With a focus on pioneering
innovative therapies for patients in need, Lucy Scientific
Discovery Inc. is dedicated to advancing the understanding and
applications of psychotropic medicines, improving mental health
outcomes, and enhancing well-being for individuals worldwide.
About High Times:Since its founding 46 years
ago, High Times has grown to be one of the world’s most well-known
cannabis brands - championing the lifestyle and educating the
masses on the benefits of this natural flower. From humble
beginnings as a counterculture lifestyle publication, High Times
has evolved into growing a network of cannabis dispensaries, the
host and creator of events like the Cannabis Cup, the producer of
globally distributed merchandise, participant in international
licensing deals, and provider of content for a multitude of fans
and supporters. In 2020, High Times began acquiring retail
dispensaries, for the first time directly touching the plant it had
been promoting for over 40 years. Today the brand owns 8 retail
stores, as well as several cannabis brands.
Cautionary Note Regarding Forward-Looking
StatementsThis press release may contain forward-looking
statements. Forward-looking statements give our current
expectations or forecasts of future events. You can identify these
statements by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements involve
risks and uncertainties and include statements regarding, among
other things, our projected revenue growth and profitability, our
growth strategies and opportunity, anticipated trends in our market
and our anticipated needs for working capital. They are generally
identifiable by use of the words "may," "will," "should,"
"anticipate," "estimate," "plans," "potential," "projects,"
"continuing," "ongoing," "expects," "management believes," "we
believe," "we intend" or the negative of these words or other
variations on these words or comparable terminology. In particular,
these include statements relating to future actions, prospective
products, market acceptance, future performance, results of current
and anticipated products, sales efforts, expenses, and the outcome.
Most of these factors are outside Lucy’s control and are difficult
to predict. Factors that may cause actual future events to differ
materially from the expected results, include, but are not limited
to: (i) the occurrence of any event, change or other circumstance
that could give rise to the legality of this consumer
product, (ii) inability to recognize the anticipated benefits
of the opportunity, which may be affected by, among other things,
competition and the ability of the company to grow and manage
growth profitability, (iii) costs related to the production, (iv)
the ability to implement business plans, forecasts, and other
expectations of the opportunity, as well as identify and realize
additional opportunities, (v) the outcome of any legal proceedings
that may be instituted against Lucy following the announcement of
the new product line, and (vi) other risks and uncertainties
indicated in the filings that are made from time to time with the
SEC by Lucy (including those under the “Risk Factors” sections
therein).
These statements are based on our management's expectations,
beliefs and assumptions concerning future events affecting us,
which in turn are based on currently available information. These
assumptions could prove inaccurate. Although we believe that the
estimates and projections reflected in the forward-looking
statements are reasonable, our expectations may prove to be
incorrect.
Media Contact:KCSA Strategic CommunicationsJon
Goldberg Lucy@kcsa.com
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