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Johnson Brothers Makes Move In California’s Cannabis Market

November 16, 2021

Fourth-ranked U.S. spirits and wine wholesaler Johnson Brothers has arranged to become active in California’s cannabis market in the years ahead through a deal with existing distributor Humble + Fume.

Johnson Brothers has funded the acquisition of a roughly 15% stake in Humble by private investment fund Green Acre Capital for $8 million, with an additional $2 million dedicated to form a joint venture with Humble focused on accelerating its expansion into cannabis distribution operations in California. The JV will be owned 80/20 by Humble and Green Acre, respectively. Green Acre also acquired the right to increase its ownership in the JV to 50% by investing up to an additional $8 million over the next two years.

Under the terms of the agreement, Johnson Brothers has the right to acquire the Humble equity purchased by Green Acre for nominal consideration “once cannabis has been sufficiently federally legalized in the United States” so that the investment won’t jeopardize any of the distributor’s federal and state beverage alcohol licenses. Johnson Brothers has projected 2021 revenues of $2.7 billion according to Shanken’s Impact Newsletter.—Daniel Marsteller

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