Ohio-based Green Growth’s CBD line spans infused face toners, body lotions, oral drops and gummies. The products are sold in hundreds of American Eagle and Abercrombie & Fitch locations, as well as through DSW outlets and kiosks in malls across the United States.
The full financial terms of the deal were not disclosed in a release on Monday. Green Growth Brands said it plans to hold up to a 20 per cent interest in the CBD business once the deal is completed after a 30-day “go shop” period. The company said the proceeds will allow it to grow its network of dispensaries and cannabis operations that currently span Nevada, Massachusetts and Florida.
Chief executive officer Peter Horvath said the decision to sell Green Growth’s CBD business is the result of challenges related to costs and constraints on liquidity that prevented the company from growing that side of the business to its full potential.
"With high-potential in the future comes material overhead costs and other obligations in the near term,” he said in a release on Monday. “In light of these factors, we have determined it necessary and appropriate to sell the CBD business and focus on executing our MSO business plan.”
BRN Group is a cannabis consulting collaboration between Green Growth Brands, Southern Glazer’s Wine & Spirits, digital agency Tygershark, and other marketers.
Dia Simms, CEO of BRN Group, told Yahoo Finance Canada in October that her company will focus its early efforts on hemp-derived CBD, as cannabis with THC remains illegal at the federal level in the United States. She described BRN Group as a “first of its kind, privately-held, global brand development, management and distribution company that licences, manages and distributes superior cannabis brands worldwide.”
Combs, who has invested in CBD beverages, told Yahoo Finance Canada that he may be working with Simms again “very soon.”
Green Growth Brands reported its second quarter financial results after the closing bell on Monday. The company booked a before-tax loss of $34.8 million for the three months ended Dec. 28, 2019. CBD accounted for $11 million of the $21.1 million in total revenue during the period.
Shares have collapsed more than 92 per cent over the past year.
Green Growth Brands also announced a corporate reorganization aimed at saving the company $4 million in annual costs. Prior to the announcement, the website Columbus Business First reported that the company will cut an unspecified number of jobs in Columbus, Ohio.
Green Growth Brands abruptly cancelled Monday’s quarterly call with analysts, rescheduling for Feb. 26 at 5:00 p.m. ET.