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TransCanna Holdings Inc. (CSE: TCAN) Signs LOI to Acquire Goodfellas Group LLC, Continuing Growth Strategy

  • LOI signed to acquire full-service advertising/marketing agency Goodfellas Group LLC, which serves cannabis/hemp industries throughout the U.S.
  • TransCanna recently closed IPO, generating C$2.2 million in gross proceeds
  • Principal business centers on branding, transportation, distribution, logistics and fulfillment services to California’s medical and adult-use cannabis industry
  • Selection of Purple Crown Communications Corp. of Vancouver, Canada, as IR consultant is expected to build shareholder base, attract potential investors
  • U.S. legal cannabis industry projected to reach $23.4 billion in consumer spending in 2022, growing at a 22 percent CAGR from 2017-2022

TransCanna Holdings Inc. (CSE: TCAN), which recently raised C$2.2 million through its initial public offering (“IPO”) to help finance the company’s entry into California’s cannabis distribution and branding market (http://cnw.fm/oZs4E), has signed a non-binding letter of intent to acquire Goodfellas Group LLC, a full-service advertising and marketing agency that specializes in the cannabis and hemp industries. The move is designed to further expand the company’s reach and continue its ongoing growth strategy.

“It’s critically important that in order for our future brands to be successful in the cannabis and hemp space, we have to have relationships with the dispensaries and retailers, who in turn have the relationships with the end users,” Jim Pakulis, CEO of TransCanna, stated in a news release announcing the pending acquisition (http://cnw.fm/w77xL). “Through GoodFellas, we’ll have immediate access to many of the most successful dispensaries in California, and retailers throughout the US. In addition, we’ll be examining GoodFellas clientele to determine if there are potential acquisition candidates that fit our extremely critical vetting process.”

The Goodfellas acquisition price will be calculated as two times the previous 12-month revenues at the time of execution of the definitive agreements, as set forth in the audited financial statements of Goodfellas. Sixty percent of the acquisition price will be paid at closing, of which one-half will be payable in cash and the rest payable through the issuance of TransCanna’s common shares. The remaining 40 percent of the acquisition price will be paid 12 months after the closing. TransCanna also anticipates retaining key members of the Goodfellas staff.

TransCanna is already in the process of acquiring 23 branding agreements from Goodfellas.

“We watched first-hand how Jim took TransCanna from the inception stage in 2017 to overseeing a successful IPO,” Nam Tran, president of Goodfellas, noted in a news release. “We believe TransCanna’s long term vision aligns with ours which is to build a portfolio of extremely successful brands and have the distribution and sales teams already in place as the brands come online.”

A new report issued by Arcview Market Research in partnership with BDS Analytics projects that the legal cannabis space in the U.S. will experience double-digit growth from 2018 to 2022. According to the report, “The State of Legal Marijuana Markets, Sixth Edition,” consumer spending on legal cannabis products in the U.S. was expected to reach $11 billion in 2018 and climb to more than $23 billion by 2022, growing at a 22 percent compound annual growth rate over the five-year period (http://cnw.fm/yX693). A separate Arcview report, focusing on the economic multiplier effects of U.S. consumer spending on legal cannabis in 2021, states that more than 414,000 jobs will be created in the industry, with over $4 billion generated in tax receipts (http://cnw.fm/XPz6w).

Transporting cannabis products in California has been challenging because of the state’s patchwork of local and state regulations. Companies regulated by the U.S. Department of Transportation are barred from participating, because cannabis remains illegal under federal law, adding another layer of complication to distribution (http://cnw.fm/U27rO). Companies looking to excel in the sector must hold a state-issued distributor license from the Bureau of Cannabis Control.

TCM Distribution, the operating company managed by TransCanna, has already entered into three exclusive distribution agreements with licensed operators on the condition that the company gets all of the necessary distribution and transportation licenses and California state permits. TransCanna has also entered into an intellectual property rights and royalty agreement for the Track & Trace software platform required by the state of California.

Keeping shareholders informed is a priority for TransCanna, which recently engaged Purple Crown Communications Corp. of Vancouver to act as its investor relations consultant, subject to regulatory approval of applicable filings with the Canadian Securities Exchange, according to a company news release (http://cnw.fm/6itiW).

“Our goal was to align ourselves with a firm that puts shareholder communication first and can build a strong shareholder base as management focuses on building the business,” Pakulis stated in the release. “We’re extremely pleased to have retained Purple Crown, and we look forward to working with them and growing TransCanna together.”

Purple Crown will assist TransCanna in broadening its shareholder base and creating effective communications tools for shareholders and potential investors. Purple Crown has been engaged for a term of 12 months, renewable on a monthly basis thereafter on mutual agreement, and it will be paid a monthly fee of $7,000. Except for the investor relations services agreement, Purple Crown does not have any interest, directly or indirectly, in the company or its securities.

For more information, visit the company’s website at www.TransCanna.com

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