Cannapany on May 5, 2021 No Comments
High Tide is purchasing US-based Fab Nutrition as it looks to expand deeper into the US market
The US cannabis market is viewed as potentially one of the largest markets in the world, providing legislators can come to terms on how to legislate the market. 2021 is still expected to be the year for major US cannabis reform and several companies are preparing to find a way into the country. One of these is High Tide Inc., a Canada-based company backed by both Aurora Cannabis and Aphria, which is expanding its US operations through a new acquisition.
High Tide is purchasing 80% Wisconsin-based Fab Nutrition for $20.64 million, with an option to purchase the remaining 20%. This will allow the company to increase its cannabis eCommerce marketplace position, offering accessories and hemp-derived cannabidiol (CBD) products where possible. Fab Nutrition, which operates as FABCBD, offers CBD oils, creams, gummies and more and, according to a press release, had over 1.3 million online impressions with an average order value of $91.90 last year. Josh Delaney, who founded Fab Nutrition and is its only shareholder, will serve as GM and oversee global expansion of the company.
Raj Grover, president and CEO of High Tide, explains, “Investors will recall that just over two months ago we declared our intentions to ramp up acquisition activity at High Tide, and we had disclosed our approach to focus on businesses that were in the U.S., compatible with our ecosystem, and generating meaningful results. In this context, I could not be more thrilled to announce the acquisition of FABCBD.”
He adds, “We evaluated numerous U.S. CBD opportunities and FABCBD clearly stuck out from the rest. FABCBD has been exceptionally run, having more than doubled revenue and EBITDA in each of 2019 and 2020, including generating terrific gross margins of 74% and EBITDA margins of 40% in 2020 – by far the highest of all CBD companies we evaluated. In addition to the company’s financial profile, we were also attracted to FABCBD’s corporate social responsibility initiatives and spirit of giving back – which are both ingrained in our DNA as well. With thousands of satisfied U.S. customers, the FABCBD brand is well-positioned for international expansion. I am very excited to welcome Josh and the FABCBD team to the High Tide family.”
Congratulation!