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High Tide Inc
Symbol HITI
Shares Issued 632,474,770
Close 2021-03-23 C$ 0.88
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High Tide completes Smoke Cartel acquisition

2021-03-24 07:47 ET - News Release

Mr. Raj Grover reports

HIGH TIDE ACQUIRES LEADING E-COMMERCE RETAILER SMOKE CARTEL

High Tide Inc. has completed the acquisition of Smoke Cartel Inc. and now operates both the largest and second-largest e-commerce platforms for consumption accessories in the world (1) with a combined total of 33 million site visits in 2020. As a result of the acquisition, High Tide has considerably expanded its footprint in the United States market and is very enthusiastic about its position to begin on-line cannabis sales should the United States move forward with federal legalization.

"The acquisition of Smoke Cartel is part of our strategy to aggressively pursue M&A [merger and acquisition] targets that can be immediately accretive to shareholders. Now that the transaction has closed, High Tide will move quickly to take advantage of Smoke Cartel's proprietary and licensable drop-shipping technology to enhance all our e-commerce businesses and further drive vertical integration across all accessory business lines while continuing to make progress on our application to list on the Nasdaq," said Raj Grover, president and chief executive officer of High Tide. "This deal immediately gives High Tide access to Smoke Cartel's 550,000 customers, driving more sales opportunities and increased profit margin," added Mr. Grover.

The acquisition was completed pursuant to the terms of the definitive agreement previously announced by the company on Jan. 25, 2021. High Tide acquired all of the issued and outstanding shares of Smoke Cartel (SC shares) for $8.0-million (U.S.), implying an approximate value of 31 U.S. cents per SC share.

The consideration comprised: (i) 9,540,754 common shares of High Tide, having an aggregate value of $6.0-million (U.S.) with each High Tide share priced at the 10-day volume-weighted average price of the High Tide shares on the TSX Venture Exchange immediately prior to the closing of the acquisition; and (ii) $2.0-million (U.S.) in cash. As a result of U.S. securities law considerations and negotiations between the parties, certain Smoke Cartel significant shareholders have agreed to allow the cash consideration to be allocated first to Smoke Cartel's shareholders generally, who were paid fully in cash, using all or a portion of the cash consideration.

Pursuant to the acquisition agreement, 25 per cent of the share consideration has been placed in escrow for a period of 12 months from closing.

In connection with the acquisition, High Tide is excited to announce that Sean Geng, founder and chief technology officer of Smoke Cartel, has joined the High Tide team as chief technology officer to oversee all IT (information technology) and e-commerce initiatives for High Tide globally.

The acquisition is an arm's-length transaction pursuant to applicable regulatory policies.

(1) As of March 23, 2021, based on traffic analytics data provided by SEMrush Inc.

About Smoke Cartel Inc.

Smoke Cartel is one of the leading on-line retailers of glass water pipes, vaporizers, consumption accessories and hemp-derived cannabidiol products. The company provides a marketplace with a wide variety of high-quality products, subscription boxes, reliable customer service and rapid dependable shipping. Smoke Cartel leverages its proprietary marketplace technology to seamlessly connect brands and vendors with its growing customer base built over the last seven years. The company's website offers fast load times and optimizations, making the customer experience quick, seamless and engaging.

About High Tide Inc.

High Tide is a retail-focused cannabis company enhanced by the manufacturing and distribution of consumption accessories. The company is the largest Canadian retailer of recreational cannabis as measured by revenue, with 77 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan. High Tide's retail segment features the Canna Cabana, KushBar, Meta Cannabis Co., Meta Cannabis Supply Co. and NewLeaf Cannabis banners, with additional locations under development across the country. High Tide has been serving consumers for over a decade through its numerous consumption accessory businesses, including e-commerce platforms Grasscity and CBDcity, and its wholesale distribution division under Valiant Distribution, including the licensed entertainment product manufacturer Famous Brandz. High Tide's strategy as a parent company is to extend and strengthen its integrated value chain while providing a complete customer experience and maximizing shareholder value. Key industry investors in High Tide include Aphria Inc. and Aurora Cannabis Inc.

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