Cansortium Inc. (OTC:CNTMF), a multi-state cannabis operator under the FLUENT brand and RIV Capital Inc. (OTC:CNPOF) announced a merger that will operate in Florida, New York, Texas, and Pennsylvania, covering 25% of the U.S. population with eight cultivation and processing facilities and 42 retail dispensaries.

Supported by ScottsMiracle-Gro's $175 million debt elimination, the merger combines Cansortium's operational expertise with RIV Capital's $66 million cash reserve. But how will this consolidation impact stakeholders and the cannabis market in these key states?

Financial Position And Growth Opportunities

The combined company is expected to have a pro forma cash balance of $74 million as of March 31, 2024. This will enable the company to fund growth opportunities, including the New York market. The merger is projected to generate $5-10 million in annual cost synergies through operational efficiencies and corporate integration.

Cansortium reported 2023 pro forma revenue of $105 million and an adjusted EBITDA of $27 million.

Support From ScottsMiracle-Gro

The merger garnered support from ScottsMiracle-Gro (NYSE:SMG), which plans to exchange its convertible notes in RIV Capital for non-voting shares of Cansortium, eliminating $175 million in debt. The move will strengthen the new company's balance sheet, which will operate under the Cansortium name and be headquartered in Tampa, Florida.

Robert Beasley, CEO of Cansortium will lead the combined company. "The plan to bring together these two companies is expected to position us to continue providing high-quality service with the FLUENT brand experience," Beasley stated.

William Smith, executive chair of Cansortium agreed. "With the addition of the New York cannabis market, Cansortium is expected to operate in 4 of the 5 highest population states in the U.S."

Shareholder Distribution And Operational Footprint

Chris Hagedorn, director of RIV Capital, emphasized, "We expect that the Combined Company will unlock value drivers to the benefit of our shareholders as well as those of RIV Capital and Cansortium."

Shareholders of RIV Capital will receive 1.245 Cansortium shares for each RIV Capital share held.

Post-merger, Cansortium shareholders will own approximately 51.25% of the new entity, while RIV Capital shareholders and The Hawthorne Collective will own about 48.75%.

Mike Totzke, interim CEO and COO of RIV Capital also commented.

"The Combined Company will enable RIV Capital to become an established multi-state operator, beyond New York."

To learn more about the cannabis business and how to invest in the sector, don't miss the opportunity to join us at the 19th Benzinga Cannabis Capital Conference in Chicago this October 8-9. Engage with top executives, investors, policymakers, and advocates to explore the industry's future. Secure your tickets now before prices increase by following this link.

Photo: AI-Generated Image.