As of yesterday, Liht Cannabis Corp. (CSE:LIHT) (OTCQX:LIHTF) officially changed their company name to Citation Growth Corp. The pot stock will be trading on the CSE under the new symbol “CGRO” starting Wednesday, June 12, and all shares will be consolidated on a 4:1 basis. The change is part of a rebranding initiative following Citation Growth’s earlier announcement to acquire Nevada’s ACC Group of Companies.
According to Monday’s press release, the definitive agreement to acquire ACC will be complete by Saturday, June 15. Citation Growth first announced the acquisition agreement on May 24, citing that ACC’s cannabis seed genetics program will be a major facilitator in the pot stock’s growth in Nevada’s lucrative cannabis market.
“[Citation Growth] anticipates the superior quality, capacity, and reputation afforded by the acquisition of ACC will accelerate our Nevada program and position [Citation Growth] to become the pre-eminent cannabis cultivator and producer in the state,” previous Liht CEO Rahim Mohamed explained in May’s press release.
The acquisition itself turns Citation Growth into one of the largest licensed cannabis producers in the state, with 550,000 square feet of cultivation space and another 16,000 square feet of processing space. Citation Growth will be combining their organic cultivation techniques with ACC’s seed genetics in order to create what the company is calling “a new premium cannabis powerhouse.” Citation Growth will also be acquiring three new cannabis brands as per the agreement, adding BluntBox, Superior, and Garden of Weeden to their portfolio.
The acquisition and name change also brings with it a new CEO. Howard Misle, Chairman and CEO of ACC, will be the new CEO of Citation Growth once the transaction is complete. Rahim Mohamed will be staying on as President of the company.
"In electing to partner with Liht and its experienced management team, ACC believes it will gain the expanded platform and capital markets support network necessary to leverage our collective success, allowing for an eye toward future growth outside of the State of Nevada,” Misle said of the acquisition last May.
Cannabis investors are asking—will this acquisition be worth it?
Taking a closer look at Liht Cannabis, investors will note that the company’s debt increased to $4.5 million over the past year, a huge leap from the $978,000 they owed previously. These numbers will no doubt change once the acquisition is complete and commercial sales are underway. But Liht only just made their first commercial sale on May 13, barely two weeks before announcing their acquisition of ACC. The sale included Liht’s entire supply of cannabis grown in their Las Vegas facility and was facilitated by ACC’s marketing and advertising experience in the state.
It appears that ACC has been instrumental in Citation Growth’s success in the Las Vegas market, making their partnership an expected, yet strategic, move to stand out in this crowded industry. But it could be too little too late. The company’s cannabis concentrates will not launch in Nevada until July, which is still ahead of Canada’s infused market opening but still much later in the American infused markets than some investors would like. On top of that, the construction of Citation Growth’s newly acquired cultivation and processing facilities are not yet complete, and many of the growth estimates are resting on the assumption that these facilities will be finished soon and within a $90 million budget.
On a more positive note, Liht was known for their organic cultivation techniques, a strategy that could pay off with niche consumers once the market starts to level out over the next five years. These techniques, combined with ACC’s genetics team could also elevate the brand as a whole if they can meet the growing consumer need for organic products with predictable psychoactive properties. But with the acquisition still not closing until the end of this week, one big question remains—are investors willing to wait?
While the cannabis stock talks a big game when it comes to rebranding and marketing, before the new name, the numbers were not necessarily lining up. Last week, Liht was down eight percent. They are not kicking off this week with any positives either. Although the transaction will not officially close until the end of the week, it is safe to assume that any positive changes will be slow, given the volatility of this particular stock.