Canadian cannabis producer Cronos Group is investing $300 million in the US hemp market through the acquisition of Lord Jones.

WHO: Lord Jones, founded by retail veteran Cindy Capobianco and her husband Robert Rosenheck in 2015, manufactures, markets, and distributes hemp-derived cannabidiol-infused skincare and edible products. The duo founded the business in California and originally sold products with THC, too, but eventually transitioned into a CBD-only business.

Cronos Group is an innovative vertically integrated global cannabinoid company with international production and distribution across five continents. Cronos Group is committed to building disruptive intellectual property by advancing cannabis research, technology, and product development. With a passion to responsibly elevate the consumer experience, Cronos Group is building an iconic brand portfolio. Cronos Group’s portfolio includes Peace Naturals, a global health and wellness platform, and two adult-use brands, Cove and Spinach.

WHY: The deal gives the Canadian Cronos Group a foothold in the fast-growing US CBD market.

IN THEIR OWN WORDS: “Rob and Cindy have built a differentiated, best-in-class platform with hemp-based CBD formulations that stand for quality and consistency. Our goal is to preserve the integrity of all Rob and Cindy have created, while also learning from them and leveraging Cronos Group’s resources to capitalize on the significant demand for skincare and other consumer products derived from hemp,” said Mike Gorenstein, Cronos Chairman, President and Chief Executive Officer, in a statement.

“The inspiration for our company was simple, we wanted to create a brand we wished we could buy as adult consumers,” said Mr. Rosenheck. “We chose Cronos Group because they share our vision and values and will help us continue our mission. We are incredibly proud of our team and grateful to our customers who are responsible for our success. Cindy and I look forward to working with Cronos Group to further extend the love and enthusiasm for our products.”

DETAILS:

• Cronos Group Inc. acquired the parent company of Lord Jones for $300 million.
• The deal is made up of cash and stock, with USD $225 million of the total consideration paid in cash and the balance paid in newly issued Cronos Group common shares.
• Cronos Group will fund the cash portion of the transaction with cash on hand.
• Silas Capital was a minority investor in Lord Jones according to Pitchbook.
• The company did not divulge revenue but industry sources speculate the brand hasn’t crossed $40 million in annual sales.
• A Glossy article on Lord Jones included an estimate that its sales increased 900% last year.
• Both Capobianco and Rosenheck will stay on with the brand.
• Perella Weinberg Partners LP is financial advisor to Cronos Group, and Sullivan & Cromwell LLP and Blake, Cassels & Graydon LLP serve as legal counsel.
• Lazard Ltd. is financial advisor to Redwood Holding Group, LLC (Lord Jones), Jeffrey D. Segal, A Professional Corporation, and Kirkland & Ellis LLP serve as legal counsel.