Lineage Grow Company

Overview

Lineage Grow Company Ltd. (CSE:BUDD) is a vertically-integrated, multistate cannabis company that is developing a portfolio of high-quality, branded cannabis products combined with an exceptional retail experience. Lineage has been strategically acquiring cultivation and retail companies in California, Oregon, Washington, Pennsylvania and Maryland with the goal of establishing a multi-state presence, with premium quality products and recognized brands with a focus on customer experience.

Since December 2018, Lineage has been aggressively acquiring cultivation and retail locations across the US. These acquisitions are in line with the company’s vertically-integrated model as many of the companies have strategic partnerships in place that cover the seed-to-sale process. Lineage is in the process of acquiring Agris Farms, LUX, Terpene Station, Herbiculture and an unnamed medical cannabis company in Pennsylvania. Additionally, Lineage and joint venture partner Nutritional High International Inc. (CSE:EAT), have a definitive agreement with Mt. Baker Greeneries where Lineage will license proprietary intellectual property, provide services and non-cannabis materials and lease equipment.

Lineage is led by a management team that has insight into multiple industries and are proven in all aspects of corporate development and brand management. The management team is significantly invested in the company, holding a portion of shares, and are supported financially by their strategic shareholder: Nutritional High.

Company Highlights

• Vertically-integrated with a multi-state presence.
• Focused on strategically acquiring cultivation and retail companies across the US.
• In the process of acquiring Agris Farms, LUX, Terpene Station, Herbiculture and a medical cannabis company in Pennsylvania.
• Finalizing a definitive agreement with Mt. Baker Greeneries.
• Nutritional High is a strategic shareholder and joint venture partner.
• Management team with broad industry insight

A Vertically-Integrated Model

Lineage is creating a seed-to-sale experience for its customers through the strategic acquisition of a variety of companies that specialize in the growth, production, branding and distribution aspects of the cannabis industry.

Cultivation

With cultivation facilities in California, Washington and Pennsylvania, Lineage is focused on producing premium quality cannabis that is cultivated in craft-style grow operations.

Branding and Distribution

Lineage has the ability to brand and distribute a variety of premium products with their in-house distribution capabilities.

Retail

Through acquiring various retailers across the US, Lineage will be able to infuse their products, branding and style into existing licensed retail locations. Lineage is also focused on bringing their brands and products into visually inviting and consumer-friendly retail locations. The company will be offering online ordering, in-home shopping and delivery service to consumers.

Multi-State M&A Growth Strategy

Lineage is focused on creating a vertically-integrated, multi-state company that focuses on the M&A opportunities to set up a chain of high-end retail locations to provide exceptional experiences for their clients while creating a sustainable source of revenue for the company. Lineage has acquired retail locations in California, Oregon and Maryland. Lineage also has acquired cultivation facilities in California, Washington and Pennsylvania. Additionally, the company is looking at acquiring cultivation facilities in Oregon.

Strategic Acquisitions

Lineage has is in the process of acquiring multiple retail and cultivation companies in California, Oregon, Washington, Pennsylvania and Maryland to further its goal of becoming vertically-integrated cannabis company with a multi-state presence.

Agris Farms

In June 2018, Lineage entered into an agreement with Walnut Oaks, LLC. to acquire Agris Farms, a premium quality craft cannabis cultivation facility in Northern California. Lineage also has the option to acquire Agris’ integrated indoor cultivation and extraction facility in Sacramento, California. Agris has a strong operational track record with numerous distribution relationships in place.

Agris’ facilities in Yolo County, California include a fully-licensed and fully-operational 40,500-square-foot low-cost greenhouse and a 3,000-square-foot craft-style indoor facility with the capacity to commercially produce 6,000 pounds of premium quality craft cannabis. Agris has submitted an application to increase their canopy space onto the adjoining 15 acres of land and is currently waiting for approval.

Argis’ optioned Sacramento facility includes a 54,000-square-foot indoor cultivation, extraction, manufacturing and distribution facility and will be able to produce 2,000 pounds of premium quality flower and over 3,000 pounds of high-margin cannabis extract. Currently, Agris is waiting to have its Sacramento Conditional Use Permit (CUP) approved.

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*Completion of the Sacramento acquisition is subject to satisfactory completion of due diligence, and all required approvals and consents, including the approval by applicable regulatory agencies. There can be no assurance that the Sacramento acquisition will be completed as proposed or at all.

LUX

In March 2018, Lineage entered into a binding letter of intent (LOI) to acquire a 100 percent interest in Altai Partners LLC, a limited liability company operating out of California. Altai then had an agreement in place for a 45 percent interest in Lucrum Enterprises Inc.’s LUX cannabis dispensary. LUX is one of 16 licensed dispensaries operating in San Jose, California.

In April 2018, Lineage provided an update on the LUX acquisition. The update included Altai’s supplemental agreement with Lucrum to acquire the remaining 55 percent interest in LUX. Upon completion of the acquisition, Lineage will hold a 100 percent interest in the LUX dispensary.

The acquisition of LUX will give Lineage retail access in the largest cannabis market in the US. LUX already holds delivery, cultivation, extraction and distribution licenses, which is fortunate because the city of San Jose is not accepting any new applications for cannabis licenses at this time. Additionally, the LUX brand will be launching a delivery service in Q4 2018 for the Bay Area.

*Lineage has a binding LOI in place to acquire 100% of Lucrum Enterprises Inc., d/b/a LUX Cannabis dispensary. Closing anticipated in June/July 2018. Completion of the Lux acquisition is subject to satisfactory completion of due diligence, execution of a definitive agreement, and all required approvals and consents, including the approval by applicable regulatory agencies. There can be no assurance that the Lux acquisition will be completed as proposed or at all. 

Terpene Station

In December 2017, Lineage signed a LOI to acquire the assets of Rosebuds Bakery LLC.’s and Brooklyn Holding Co.’s Terpene Stations in Portland and Eugene, Oregon. Terpene Station is a leading cannabis retailer in Oregon that markets and sells cannabis products such as flower, edibles and oils. The Portland location was the first Oregon Liquor and Cannabis Commission (OLCC) licensed recreational store in the state.

The Terpene Station locations are recognized for their premium product offerings that they have secured through exclusive supply agreements with Oregon’s top growers and processors. Terpene’s retail space consists of over 5,500-square-feet between the two locations.

In June 2018, Lineage announced that they have submitted their applications to secure their OLCC Marijuana Retailer licenses. The possession of these two licenses will allow Lineage to operate the dispensaries once the Terpene Station acquisition is complete.

*Completion of the Terpene Station acquisition is subject to satisfactory completion of due diligence, execution of a definitive agreement, and all required approvals and consents, including the approval by the Oregon Liquor and Cannabis Commission. There can be no assurance that the Terpene Station acquisition will be completed as proposed or at all.

Herbiculture

In May 2018, Lineage entered a LOI with Quinsam Capital Corp (CSE:QCA) to acquire Quinsam’s 35 percent interest in Herbiculture Inc., a medical cannabis dispensary located in Burtonsville, Maryland. Herbiculture possesses one of 11 dispensary locations in Montgomery Country, Maryland which has a population of over one million residents and has been in operation since February 2018. Additionally, the dispensary is an hour’s drive to the major cities of Baltimore, Rockville and Gaithersburg.

“Herbiculture is a best-of-breed dispensary located in a market with high barriers to entry and a thriving medical marijuana patient community,” said Lineage CEO Peter Bilodeau. “We see significant value and upside in this transaction as we’re investing in a high-value license attached to an operator who is achieving impressive performance on the ground. This strategic investment marks another important milestone in our aggressive U.S. growth strategy and we look forward to pursuing additional near-term growth initiatives.”

Lineage is continuing its negotiations with Herbiculture to acquire a majority shareholder interest in the company.

*Operations began in February 2018. Completion of the 35% equity interest in Herbiculture Inc. is subject to satisfactory completion of due diligence, execution of a definitive agreement, and all required approvals and consents, including the approval by the Maryland Medical Cannabis Commission. There can be no assurance that the Herbiculture acquisition will be completed as proposed or at all.

Pennsylvania Medical Marijuana Program

In June 2018, Lineage entered into an agreement with a Pennsylvania-based medical cannabis company to finance a permit fee for the company’s proposed grower and processor license under the Pennsylvania Medical Marijuana Program (PMMP). Lineage will provide the company $200,000 for the permit application in exchange for approximately 20 to 25 percent of the shares in that company. Lineage will receive a full refund on their investment if the company fails to secure the grower and processor license. However, Lineage’s partner has successfully secured three dispensary licenses in the past.

Pennsylvania is a medical-use cannabis state with extensive conditions and regulations that make entry into the market difficult and offers a limited number of licenses to cannabis companies in the state. There are 25 grower and processor licenses available at this time and there are 50 dispensary licenses and two of those licenses are only available in the southwest region of the state.

“We see this as a potentially transformative investment for Lineage,” said Lineage CEO Peter Bilodeau. “The ability to secure a foothold in a market like Pennsylvania with high barriers to entry and attractive long-term growth prospects is indicative of our aggressive M&A expansion strategy. Furthermore, our investment risk is mitigated while our upside is significant, and we believe we’ve aligned ourselves with a strong partner who has successfully secured a Pennsylvania Dispensary Permit in the past.”

Mt. Baker Greeneries

In February 2018, Lineage with joint venture partner Nutritional High, entered into a definitive agreement with Mt. Baker Greeneries LLC, under which the company will license proprietary intellectual property, provide services and non-cannabis materials and lease equipment. As part of this partnership, the company is supporting Mt. Baker with the development of their 7,800-square-foot facility licensed for both production and processing. Lineage will work with Mt. Baker to help optimize the efficiency of their cultivation operations, sharing their technological and agricultural solutions and effective brand management concepts.

Mt. Bakers facilities are located in Bellingham, Washington and they hold a Tier 2 producer and processor license. Their indoor cultivation facility supports in-house extraction operations and is capable of testing a variety of cultivation techniques.

Management

Peter Bilodeau—CEO and President

Peter Bilodeau is a successful entrepreneur across various sectors, including real estate, management, corporate finance, oil & gas, and financial consulting. He is an active board member of several companies in the retail, financial services, and oil & gas sectors. He is also President of Quinsam Capital Corp. a merchant bank dealing exclusively with cannabis financing and investment opportunities, and Foundation Markets Inc., a boutique investment bank with extensive experience in structuring and overseeing cannabis deals.

Billy Morrison – Cultivation Advisor

Billy Morrison is the VP of Extraction at Nutritional High International Inc. He has founded the Union Collective, a successful California-based dispensary. Additionally, Morrison has experience in operating various cannabis companies and has designed a nearly autonomous grow system.

Gary Galitsky — Cultivation Advisor

Gary Galitsky has seven years of cannabis cultivation experience and has been a consultant for several Canadian licensed producers to help develop scaled plant production growth strategies.

Adam Szweras—Corporate Secretary

Adam Szweras has expertise in recreational and medicinal marijuana laws in the US and Canada. He has extensive regulatory knowledge of the cannabis industry and experience launching cannabis companies. He was a partner with the law firm Fogler, Rubinoff LLP and founder of Foundation Markets Inc., a Toronto-based investment bank and Exempt Market Dealer.

Aurelio Useche— Director

Aurelio Useche is the CEO and advisory board member of Relevium Technologies Inc., and President of ZVS Investments Inc. He has extensive experience in business strategy and management, with a focus on acquisitions of new technologies and products for the health & wellness sector.

Robert Schwartz—Director

Robert Schwartz is a serial entrepreneur for over 15 years of experience. His expertise lies in manufacturing and global distribution. He also has a background in financial services and financing micro-cap companies in the venture capital space.

Hamish Sutherland—Director

Hamish Sutherland is the former COO of Bedrocan Canada Inc. He is also the President & Managing Director of Bid.Com in the Asia Pacific. He holds a B.Eng from McMaster University & MBA from York University.

David Posner—Director

David Posner is the Chairman of Nutritional High International Inc., a director of Capricorn Business Acquisitions Inc. and an officer of Aura Health Corp. (a private company developing and acquiring marijuana health clinics in the US). He was the Acquisitions Manager for Stonegate Properties Inc. where he managed real estate properties and brokered deals in Canada and Oklahoma.