C21 Investments Inc. ( CXXIF ) announced on Friday that its wholly-owned Nevada subsidiary, Silver State Relief, LLC, is buying Deep Roots Harvest, Inc. in a $3.5 million deal.

Simultaneously, the company announced a non-brokered private placement of a principal amount of CA$1,000 ($740.939) secured convertible debenture units of the company for aggregate gross proceeds of up to CA$4 million. The proceeds will fund the deal to acquire the Nevada-based dispensary.

Dispensary Acquisition

The British Columbia-based company said in a press release that Silver State Relief is purchasing all or substantially all of Deep Roots’ assets related to the operation of its 6,500-square-foot purpose-built operational retail cannabis dispensary located in Southern Reno, Nevada.

Under the deal, the closing of the acquisition will involve the transfer of, among other things, certain machinery, tools, supplies, lease interests, contracts and other assets to the company, as well as the transfer to C21 of certain Deep Roots' retail store licenses.

The closing of the deal depends on certain conditions including:

receipt by the parties of the grant and approval by the Nevada Cannabis Compliance Board of a transfer of interest (TOI) permitting the transfer of the regulatory assets to the company;

approval by the City of Reno, Nevada of the TOI; and

consent of the landlord to the assignment of the lease as related to the Deep Roots dispensary to the company.

The purchase price to be paid by the company for the dispensary acquisition is $3.5 million.

The sum includes a cash payment of $100,000, which was paid to Deep Roots as a non-refundable deposit upon the execution of the agreement and a cash payment of $3.4 million to be paid to Deep Roots on closing.

The closing of the deal is also subject to the approval of the Canadian Securities Exchange.

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Private Placement

The company announced a non-brokered private placement of a principal amount of CA$1,000 ($740.939) secured convertible debenture units of the company for aggregate gross proceeds of up to CA$4 million.

Each convertible debenture unit offered under the private placement will be comprised of:

one convertible debenture of the company secured against the Nevada operations of the company in the principal amount of CA$1,000; and

1,000 detachable common share purchase warrants, with each warrant exercisable for one common share for CA$0.55 per share for 30 months from the issue date of the convertible debenture units.

CXXIF Price Action

C21 Investments' ( CXXIF ) shares traded 0.3353% lower at $0.321 per share at the time of writing on Friday.

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