High Times has been sold to Victoria, BC-based psychedelics firm Lucy Scientific Discovery (for LSD) headed by disgraced Hollywood executive Richard Nanula.
The news leaked out yesterday with a press release sent to a handful of media sources:
Lucy Scientific Discovery Inc. (“Lucy” or “the Company”) (NASDAQ: LSDI), a leading psychotropic innovator announces the acquisition of the intellectual property (IP) of High Times, the most recognizable and iconic brand in the cannabis industry. This acquisition provides a stream of high-margin licensing and royalty income from the well-regarded High Times, Cannabis Cup, and 420.com brands, including their respective domain names.
Lucy will issue 19.9% of its outstanding stock to High Times and make payments semi-annually for the next 5 years based on EBITDA generated from the acquired IP, which can be settled with either stock or cash at Lucy’s option. Additionally, Lucy will license the right to operate retail stores and manufacture and sell THC products in the United States back to High Times, in return for a license fee of $1.0M per year, increasing to $2.0M per year upon Federal legalization. The transaction is subject to customary closing conditions and is expected to close within two weeks.
Lucy will be acquiring brand rights with plans to monetize the IP through current and planned royalty agreements by further extending and enhancing the existing domestic and international licensing arrangements currently held by High Times, including consumer products and merchandise. The Company intends to preserve the essence of the High Times, Cannabis Cup, and 420.com brands while identifying new avenues for growth and development.
The Company expects the acquisition of High Times IP, including, the 18 licensing agreements across various product categories it will acquire, to add at least $10M of revenue and $5M of EBITDA to its 2024 results and provide a solid foundation of growth as cannabis becomes legal around the world.
Richard Nanula, CEO and Executive Chairman at Lucy Scientific Discovery Inc., commented, "Lucy expects this acquisition to drive high margin revenue quickly and sustainably across the cannabis sector around the world. This is a great opportunity to grow the market presence of the nearly 50 year old High Times brand globally through licensing and online distribution. We are confident that this opportunity can add significant value for our shareholders.”
Adam Levin, Executive Chairman of High Times added, “Over the past few years, we have been building the consumer products offerings for High Times and there is no better partner than Lucy to drive our iconic brand forward. This transaction will open up tremendous new opportunities to grow and expand the High Times brand led by Richard Nanula, who has decades of experience with some of the biggest consumer brands and companies in the world. We are delighted to become large Lucy shareholders.”
Who Is Richard Nanula?
On July 13, Lucy annouced the hiring of Nanula as CEO. He already chaired the company's board, Nanula previously held high-level positions at The Walt Disney Company, Miramax, Starwood Hotels and Resorts. Broadband Sports, Amgen and Colony Capital. Founder and former CEO Chris McElvany stepped down.
In a press release then, Nanula stated:
“Lucy is in a unique position to leverage the growing industry coupled with its reach as a NASDAQ listed Company. I have assumed the role of CEO to lead our commitment to advancing the field of psychotropic drug development and to address the unmet needs of the global wellness community.”
After graduating from Harvard Business School in 1986, he went to work at Disney, rising up to the lofty position of CFO 10 years later. But Nanula didn't stick around. He secured positions at Starwood and Amgen, joined the board of Boeing and then landed at Miramax in 2010.
He'd married Disney staffer Tracey Hart in 1995 and they had three kids. But marriage was not enough for Nanula. He began to pay for sex, as much as $10,000 per session. Nanula went to rehab several times for sex addiction and claimed he was cured. He wasn't. Hart filed for divorce in 2005.
In 2013, a woman who worked at Colony said Nanula groped her on the job in 2012. Also in 2013 came the shocking revelation that Nanula paid several female adult-film stars $1,500 each to perform oral sex in a video with him in 2011. But since they were "acting" and being filmed, it was not considered prostitution. Either way, the video went public on an adult site and several of the women identified Nanula. He paid cash using Colony Capital envelopes.
Nanula sheepishly kept quiet and took leaves from Miramax and Colony, and finally left both companies. There were some lean years until he found a new home in British Columbia with Lucy, formerly Hollyweed North Cannabis owned by Renee Gagnon. He started as board chair and moved right up to CEO in nine short months.
Canadian attorney Robert W.E. Laurie: "This deal will have no consequence in the psychedelics space. It helps High Times get out of debt. But what does it do for Lucy?"
High Times Comes A-Calling
The legendary marijuana magazine High Times is not even being printed anymore. Since buying Trans High Corporation, the former parent of High Times, in 2017, Adam Levin and his revolving door of CEOs have run the company into the ground, incurring $28 million in debt from lender ExWorks. Hightimes Holding Corp., the new company, faced a deadline to pay up or sell off this month. So he reached out to his friends at Lucy. In fact, Levin is related to board member Paul Abramowitz. He's his step-father.
In January, accordng to Green Market Report, "High Times agreed to provide $833,333 of advertising and marketing credits per year for three years to Lucy Scientific in exchange for 625,000 shares."
In a June puff piece about Nanula, Benzinga noted "Lucy Scientific's strategic alliance with High Times," but failed to mention his checkered past.
These were the tip-offs that a major deal was going down.
So, now what? Will HIgh Times reestablish its place as a leading cannabis brand or will the company, now housed by Lucy, continue to flounder?
Robert W.E. Laurie, an attorney based in Nanaimo on Vancouver Island, thinks there's a long way to go before Canada changes its policies on psychedelic drugs, which are illegal federally. "Psychedelics are way too early," he says. "We're about seven to 10 years away from recreational psychedelics legalization. This deal will have no consequence in the psychedelics space. It helps High Times get out of debt. But what does it do for Lucy?"
The company's stock is currently listed at $0.59 per share.
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