Cannabis portfolio company 1933 Industries announced today it has signed a binding letter of intent to acquire CBD beverage maker Day One in an all-stock transaction, just four months after the sparkling water brand relaunched as an independent business.
1933 Industries, which is publicly traded on the Canadian Stock Exchange, will acquire Day One for an aggregate of 55 million shares of its common stock, of which 45.2 million will be issued at closing – which is expected to be on or around January 31 – and 9.8 million will be issued after closing in quarterly payments.
According to 1933, all shares issued will be subject to a one-year hold period. Day One’s stakeholders will also be eligible to receive up to 27.5 million more shares at a set price of $0.0545 per share based on achieving gross revenue milestones over 30 months from the deal’s closing.
1933 will also provide Day One with a loan of up to $300,000 cash, which will be forgiven upon closing. No individual is expected to become a new 10% shareholder of 1933 in the deal, but Day One leadership will be allowed to nominate a director to the company’s board.
“The intended acquisition of Day One strategically positions the Company at the forefront of one of the fastest growing categories in the beverage space,” Paul Rosen, chairman and CEO of 1933 Industries said in a press release. “CBD-infused beverages are part of the healthier for you movement targeted towards a health-conscious social consumer who wants a better alternative to high-sugar drinks. With strong distribution channels already in place and an innovative approach to marketing, we anticipate Day One to be a key revenue growth driver for the Company in the future.”
Rosen added that there are “promising synergies” with Day One’s leadership and distribution channels and 1933’s Canna Hemp line of CBD wellness products that could be utilized by the company.
Based in Nevada, 1933 owns multiple THC and CBD cannabis brands, including Canna Hemp, premium flower line Level X, and a 91% stake in flower and extract producer Alternative Medicine Association, LC (AMA). Day One will be the company’s first beverage product.
Launched in 2019, Day One has had a difficult path to market. The brand was originally created to be the premiere beverage line for Genius Fund, a California cannabis startup that at one point employed over 300 people before it collapsed due to frivolous spending and the sudden death of its Russian oligarch financier.
In October, Day One CEO Chris Clifford, who created Day One while an employee of Genius Fund, relaunched the brand as a new company, with products rolling out to retail accounts in seven states last year alongside direct-to-consumer sales. Day One also brought in experienced beverage industry talent to helm the new entity, including former Red Bull executives Chris Alfieri as COO and Andy LaRocca as VP of sales and distribution, and added an in-house digital marketing team.
Day One is available in Grapefruit, Lemon and Lime flavors and each 12 oz. can contains 20 mg of CBD, zero calories, zero sugar and is flavored with natural fruit juice. The line is priced at $35.99 per 12-pack online and $2.99 per can in store, making it a more affordable alternative to the premium priced CBD-infused drinks that make up the bulk of the category.
“Our brand promotes a positive message that resonates with a large consumer audience that understands and embraces the benefits of CBD and want a zero-calorie, unsweetened beverage, at the right price point and delivered in a way that connects with people,” Clifford said in the press release.