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California Player Glass House Acquired By Canadian SPAC In $567 Million Deal

April 13, 2021

California cannabis retailer and grower Glass House is being acquired by Toronto-based SPAC company Mercer Park Brand Acquisition Corp (BRND) in a deal worth over a half-billion dollars. Mercer Park is aiming to pair the Glass House deal with two other acquisitions to create a company with both the largest retail and cultivation footprints in the Golden State.

Glass House currently operates more than half a million square feet of cultivation area that produces over 110,000 pounds of dry flower annually, as well as four dispensaries. Its retail business generated 365,000 transactions last year, with an average in-store order of $65 and an average delivery order of $101. It wholesales to approximately 250 other California retailers as well, and logged $53 million in revenue last year.

In addition to Glass House, Mercer Park will also acquire 5.5 million square feet of cultivation space from Southern California Greenhouse and 17 retail licenses from Element 7, a company that specializes in obtaining retail licenses. The combined cultivation footprint will give Glass House the most cultivation capacity of any company in California, according to BRND. The new stores are expected to be open by this time next year, also making the company the state leader in terms of retail footprint.

The total value of the transaction is approximately $567 million. It breaks down into $325 million for Glass House, $219 million for Southern California Greenhouse, and $24 million for the Element 7 licenses. It’s expected to close before the second half of the year.

“Our inaugural flower brand launch last year was a tremendous success, with our BDS ranking increasing from #63 in the state to #2 by year-end 2020,” noted Glass House co-founder and CEO Kyle Kazan. “Further, we have established a strong retail and wholesale network and best-in-class cultivation processes, all anchored by a scaled and highly efficient cost structure. We look forward to augmenting these strengths to further capitalize on the growing statewide and national CPG opportunity.”

Once the deal is complete, Glass House will be a major presence in the California market. It expects to generate $326 million in revenue for the year 2022, with an adjusted EBITDA of $104 million. It expects those figures to grow to $601 million and $240 million, respectively, in 2023. It will list on Toronto’s NEO exchange under the ticker symbol GLAS.U. Kazan and co-founder and president Graham Garrar will stay on in their roles.—Danny Sullivan

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