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Medicine Man Technologies acquiring Niwot dispensary

 

September 18, 2019 | View PDF

Vicky Dorvee

Denver-based Medicine Man Technologies is under contract to purchase five Starbuds Dispensaries including the store in Niwot.

Colorado House Bill 1090, which takes effect on Nov. 1, allows for outside investors, including publicly traded companies, to jump into the state's billion dollar marijuana industry. In anticipation, Colorado-based Medicine Man Technologies (MMT) has signed binding agreements to purchase a multitude of dispensaries statewide, including Niwot's Starbuds outlet, along with four other stores in the chain.

Medicine Man Technologies co-founder and CEO Andy Williams testified to the Senate Finance Committee on behalf of passage of HB1090 and is part of the team of stakeholders involved in developing the framework for the bill signed by Governor Jared Polis in May of this year.

"These are exciting times as we move toward our ultimate goal of becoming a vertically integrated cannabis operator," Williams stated in a press release.

MMT is on a binge these days, buying cultivation, extraction, research and development companies, along with cannabis brands and dispensaries. MMT's cannabis consulting services, technologies and supplies are publicly traded under MDCL.

In addition to the Niwot store, the $31M MMT-Starbuds deal is for stores in Louisville, Longmont, Pueblo, and Commerce City. The sale arrangement is for $15 million in cash, 2.6 million of common shares at $2.98 per share and a year down the road, a cash payment of $7.75 million. The price paid per store is based on financial performance of each dispensary.

Starbuds Corporation has 13 Colorado locations, 8 of which are owner-operator run sites, the other five are run centrally.

Ernie Craumer, owner of the Niwot and Longmont Starbuds locations, described his stores as joint ventures with Starbuds Corporation. Operated by four members of the Craumer family, the Niwot store opened in November 2017 and the Longmont location on Ute Hwy and 75th Street opened in May 2018.

During the MMT payoff time period, Ernie Craumer, his wife Callie, son Charles, and daughter Caitlin, will continue to work at and operate both stores. "It's business as usual," Craumer said for the time being, until the payment schedule is complete.

The Craumers will retain ownership of the building at 6924 N. 79th Street and will lease the property to MMT. There are no plans to change the name from Starbuds or to modify the inventory lines.

"We were extremely excited about it - it's been in the works for a number of months," Craumer said. "A number of different companies looked at the Starbuds enterprise and we were comfortable with Medicine Man since they're local and have a good understanding of the Colorado market. It was a good match for both companies."

Although the rules around these new types of purchases are not firm yet, what is certain is that the Starbuds deal will be among the earliest to be vetted by the Marijuana Enforcement Division. Given the amount of legal legwork still to be done, the anticipated timeframe for completion of the sale is toward the end of the first quarter of 2020.

 

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