The Valens Company opens its door to the US

Published on April 28, 2021 by oz. staff

The Valens Company has opened its door to the U.S. by acquiring the country’s largest privately held CBD player.

The Valens Company announced this week the acquisition of Green Roads in a cash and share transaction worth about US$40 million, plus up to an additional $20 million in if certain milestones are achieved.

Based in South Florida, Green Roads is ranked second by market share with distribution across physical retailers and online direct-to-consumer. The company’s distribution network consists of more than 7,000 retail stores and a robust e-commerce and marketing platform with over 30,000 five-star reviews across all its product lines.

“After analyzing over a hundred companies across the US CBD market, we clearly recognized the value in the Green Roads platform with its best-selling brand. Our complementary businesses, culturally aligned teams, and shared ‘it’s personal’ mission to provide consumers with high quality, innovative cannabis products led to an undeniable combination that we believe will disrupt the industry,” said Valens CEO and co-founder Tyler Robson.

“The acquisition of Green Roads represents only the first step in our US expansion strategy as we expect to continue to unlock complementary, revenue-generating opportunities while we forge our presence and build our reputation in the world’s largest cannabinoid market. Together, The Valens Company and Green Roads make a formidable team, and the combined entity will be primed for significant growth as the global market develops.”

Strategic Highlights

The Green Roads Acquisition is expected to provide numerous strategic and financial benefits that will further The Valens Company’s goal of becoming a leading global manufacturer of cannabis consumer packaged goods with a world-class team, distribution network and product offering, including:

  • Access to the largest cannabinoid market in the world, with immediate entry into the US CBD market which is currently estimated at nearly C$6 billion.5 With exposure to the US CBD market through the Green Roads Acquisition, Valens will continue to strengthen its reputation by expanding its partnership network, actively pursuing complementary business lines and providing a potential pathway to enter the legal cannabis market if and when permissible by US federal law and subject to requirements of the TSX. Additionally, Green Roads is strategically located in Florida, which has a robust state-legal medical cannabis program.
  • Strengthened leadership with the addition of an on-the-ground highly experienced US management team with proven track records in pharmaceuticals, consumer packaged goods, e-commerce, and marketing. Additionally, the Green Roads team holds added expertise in producing and distributing high quality cannabinoid-based health and wellness products. Valens and Green Roads’ shared commitment to formulating and manufacturing best-in-class, innovative products will be bolstered by IP-sharing, continued quality control, stability, and testing protocols across all platforms in Canada and the US, in addition to various R&D and product innovation initiatives.
  • Speed to US market with owned manufacturing and co-manufacturing platform located across two Florida-based facilities already producing significant revenue. Green Roads leverages its owned cGMP  manufacturing infrastructure, which includes a production facility and warehouse, in addition to outsourced co-packing services for certain product lines allowing for lower overall capital commitments and increased flexibility to enter new consumer verticals. Green Roads’ scalable manufacturing infrastructure is expected to provide Valens with the agility to capitalize on future US opportunities with the potential to integrate its core expertise and proprietary extraction and manufacturing technologies into the existing value chain.
  • Expanded product portfolio with a wide range of high-margin products spanning across major wellness categories, including oils, ingestibles, topicals, pet products, capsules, and soft gels. Green Roads’ product portfolio also includes a collection of uniquely formulated products such as hemp flower coffee and line of functional gummies that target sleep, stress, and immune support. Valens plans to introduce Green Roads’ award-winning formulations to the Canadian market which is expected to drive market share in the health and wellness vertical where the Company intends to be a market leader.
  • Enhanced distribution network and established brand loyalty, with a strong retail presence and robust direct-to-consumer e-commerce platform averaging 9,000 orders per month. With its differentiated, pharmacist-formulated products and unparalleled focus on the end user, Green Roads has secured sell-in at various major retail chains and an extensive network of independent retailers across the US. The company’s US distribution capabilities are expected to grow as consumer acceptance of CBD as a wellness product increases with additional FDA guidance and as incoming larger players, such as major CPG companies, add legitimacy to the sector. Valens will seek to replicate Green Roads’ brand success in the Canadian market as the Company begins manufacturing and distributing these branded products across its newly strengthened domestic distribution network.
  • Growing global presence, with Green Roads’ products already being sold in over seven countries. With the addition of Green Roads’ product portfolio, Valens expects to unlock additional global distribution capabilities, particularly in the Asia-Pacific region through its partnership with Cannvalate where medicinal markets continue to mature, and product variety broadens. Together The Valens Company and Green Roads will continue to advocate for standardized testing and quality standards to promote consumer transparency on a global level.
  • Aligned corporate branding, with a shared passion and ‘it’s personal’ objective among each team to bring purposeful products to the world. In unison, The Valens Company and Green Roads will continue to further their common goal of demonstrating the transformative potential of cannabis and creating exceptional products with the end user top of mind.

The Green Roads acquisition is subject to approval from the Toronto Stock Exchange and Valens’ lender approval.