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Empower Clinics' acquisition of Sun Valley Clinics expected to create one of the largest clinic groups in US medical cannabis sector

Empower runs a network of physician-staffed clinics focused on patient care using medical cannabis
A cannabis tea
Empower runs a network of physician-staffed clinics focused on patient care using medical cannabis

Empower Clinics (CSE:EPW) is set to buy Sun Valley Certification Clinics Holdings in a game-changing deal, expected to create one of the largest clinic groups in the medical cannabis sector in the US.

The acquisition is conditional on Empower completing a debt or equity financing to raise at least US$3 million.

Empower runs a network of physician-staffed clinics focused on patient care using medical cannabis. It already has more than 120,000 patients, an expanding clinic footprint and a focus on new technology.

WATCH: EmPower Clinics New CEO has bold vision for the Cannabis wellness company

Meanwhile, Sun Valley operates medical cannabis and pain management practices, with five clinics in Arizona, one in Las Vegas, a telemedicine platform serving California, and a fully developed franchise business model for the domestic cannabis industry believed to be a first in the US.

The combined group will boast 12 locations and have a combined patient count of 165,000 across Washington, Oregon, Illinois, Arizona, Nevada and California, and the potential to rapidly expand the clinic network via the Sun Valley franchise program.

Dustin and Andrea Klein have been the owners and operators of Sun Valley since launching the first clinic in 2013.

"As we begin to reposition Empower as a vertically integrated global health and wellness company, helping consumers access products and specialized medical care for serious qualifying conditions, having Dustin and Andrea Klein join me in leadership to rapidly expand Empowers clinic and distribution network across the United States is the first major step toward our ambitious objectives," said Steven McAuley, Empower's chairman and CEO.

Among the highlights of the deal, Empower's customers are expected to benefit from high margin derivative products, including CBD lotion, tinctures, lozenges, patches, e-drinks, topical lotions and gel caps. Patients will also be able to access Empower's customer service, home delivery and e-commerce platform.

Under the proposed terms, Empower will pay US$625,000 cash at closing and a US$150,000 performance holdback, for a total of US$775,000 in cash

Issuing shares to the Kleins

Empower will also issue the Kleins shares worth US$1 million, and, subject to the satisfaction of defined performance metrics, further shares worth US$2 million, which will vest in quarterly instalments over three years from closing.

Empower has agreed to enter into employment agreements with Dustin Klein and Andrea Klein, each having an initial term of two years.

When the deal completed, it is expected that Dustin Klein will be appointed to the Empower board of directors.

Contact Giles at [email protected]

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