NICI Quick Take

Hightimes is a California-based cannabis company with offices in Los Angeles and New York City, best known for producing the High Times Magazine and operating the Cannabis Cup award series. For over 45 years the company has been a strong advocate for the legalization of cannabis, and has since grown into a lifestyle publication about the industry. It’s made some acquisitions along the way, buying out competitors such as Green Rush Daily Inc. and Dope Magazine, two cannabis media companies.

Until recently, the company’s main focus was on cannabis media and journalism. However, upon signing a letter of intent to acquire Humboldt Heritage Inc., Hightimes took its first steps towards entering the retail market. It plans on selling its branded products at two new High Times dispensaries in Las Vegas and Los Angeles. Subsidiaries included in the deal are Grateful Eight LLC and Humboldt Sun Growers Guild. After closing the acquisition, High Times will be vertically integrated, able to cultivate, process, and sell cannabis and its byproducts.

Executive Chairman Adam Levin has been involved with the organization since purchasing it in a deal valued at $70 million back in 2017 through his company, Oreva Capital. He had hoped to raise as much as $50 million in its latest Regulation A+ offering, which brought forth about 26,000 new shareholders of the company (investors purchased shares at a minimum investment of $99, at a share price of $11.) However, the offering has only provided the company with about $20 million in capital through the end of March 2020.

Management shouldn’t have had trouble promoting the actual offering; it’s made up of investors who bring plenty of experience in media, tech and social networking sectors as well as cannabis – related organizations. That’s why it’s a bit concerning that it only raised $20 million, considering Levin purchased it for more than triple that nearly three years ago for just its media assets. And Hightimes has been trying to go public since June 2018, letting go of its CFO last August after failing to go public again.

However, this time it can make good on its hopes, after officially receiving its ticker and OTC market designation. Its strategy revolves around purchasing mom-and-pop dispensaries and incorporating the High Times brand to hike up sales and popularity, so all eyes will now be on the acquisition for Humboldt throughout its closing and its performance afterwards. This will speak to management’s ability to conduct the proper due diligence in the retail side of the market.

IPO Details

Valuation $225.0M
Total Raised $20.0M
NICI Subsector Cultivator, Processor