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Cannabis Global, Inc. (OTCPK:CBGL) announced Tuesday that it has signed a non-binding letter of intent to create a joint venture that includes an option to acquire a controlling interest in the Massachusetts-based cannabis business operator.
Under the terms of the proposed joint venture, the Los Angeles-based company Hub Craft and Active Health Foods, Inc. (OTCPK: AHFD) will form a California corporation to enter the state's cannabis marketplace.
The combined entity will be granted exclusive licenses on all Hub Craft products, branding and associated technologies in California. It will also have an option to purchase a 51% controlling position in Hub Craft for $15 million anytime within nine months of the effective date of the joint venture.
With the Massachusetts market still in its early stages, as opposed to California and Oregon markets that are seeing massive overproduction of cannabis and a drop in prices, the prices in the Bay State have remained remarkably robust.
In addition, with licenses in Massachusetts limited to a maximum of 100,000 square feet, Cannabis Global says it believes that larger cannabis industry players will not be able to dominate the state marketplace.
All three companies see a massive population in the Massachusetts area that is already primed to become avid legal cannabis consumers.
"We are particularly impressed with the robust technologies The Hub Craft is introducing to the marketplace, and we feel these will be well received in the mature California markets in the Los Angeles and San Francisco metro areas," commented Arman Tabatabaei, CEO of Cannabis Global. "We are looking forward to collaborating with both the management teams of Hub Craft and Active Health Foods to create a unique set of assets to serve the significantly sized California marketplace."
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Cannabis Global's shares traded 11.76% lower at $0.0075 per share at the time of writing on Wednesday.
Photo: Courtesy of Cytonn Photography on Unsplash
