Tidal Royalty Corp (CSE:RLTY) (OTC:TDRYF) the cannabis industry financier, announced a transformational deal, which would see it merge with private cannabis firm MichiCann Medical Inc to change its model and create a major multi-state operator.
It has entered a binding letter of intent with MichiCann, operating as Red White & Bloom, (RWB), to acquire all of the issued outstanding shares of MichiCann.
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If the deal is completed, Tidal shareholders will hold around 20% of the new entity, while the former shareholders of MichiCann will hold around 80%.
Tidal will change its name to Red White & Bloom or a name acceptable to MichiCann, the CSE and regulatory authorities, it said in a statement Thursday.
MichiCann is a private Ontario-based cannabis investment company with an experienced management team with a record in the cannabis industry including CEO Brad Rogers, who was a founder of Mettrum Health Corp, before its sale to Canopy Growth Corp (NYSE:CGC), and the former president of Canntrust Holdings.
Tidal's finance chief Theo van der Linde said in a statement: "We are very enthused to bring a transaction forward to our shareholders, that while not specific to our royalty model, represents a significant first step to become an MSO (multistate operator).
"The MSO model, of which the investment community is rightfully fond and enamoured, is due for a significant shift in approach."
In addition to the Tidal's existing positions in California and Massachusetts, Linde said he expected the new company will focus, with the strength of its world-class team, on the major markets in the United States, namely Michigan, California, Massachusetts and Florida.
"The company believes that the combination of these efforts including standardization of brand, vertical integration, and the anticipated growth in the Michigan medicinal market as well as the advent of the Michigan recreational market, easily places RWB in a position to be one of the top tier operators from a revenue and profitability perspective," he said.
Tidal's shares will remain halted until the CSE has reviewed and approved the proposed deal and determined it appropriate to lift the halt on trading.
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