Shares in Aleafia Health Inc (CVE:ALEAF) lit up Tuesday as the company struck a joint venture with the influential Serruya family, a huge force in the pot industry, to launch an adult-use cannabis retail chain across Canada when it becomes legal.
The venture called One Plant will be backed by Aaron Serruya, president of International Franchise Inc, which has more than 4,500 restaurants in 50 countries and is behind brands like Yogen Früz and Swensen's ice cream.
He was an early investor in one of the largest global cannabis companies, Aphria (TSE:APH), and is the current majority owner of Liberty Health Sciences.
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Aleafia said the deal marks the first phase of a multi-phase strategy to see it enter the adult use Cannabis industry alongside its cannabis cultivation and medical clinic businesses.
The initial launch will include 20 retail locations in Ontario, with a subsequent expansion across Canada.
"The Serruya family are excellent retail entrepreneurs with a proven track record in quickly scaling their businesses to global proportions,” Aleafia CEO Geoffrey Benic told investors. “Our team is very excited to work with the Serruya family to achieve the same result in the global adult-use cannabis market.”
Meanwhile, Aaron Serruya, managing director of Serruya Private Equity, added: "The Serruya family is pleased to joint venture with Aleafia’s strong management team in building and scaling a retail cannabis chain with immediate national reach and global expansion plans.
"We are excited to once again play an early role in building one of the world’s largest cannabis companies."
The joint venture will be owned 51% by Aleafia and 49% by Serruya family. Aleafia will purchase its stake by issuing 5 million shares to the family.
The Serruya family are also due to invest in the venture via a private placing of $10 million in Aleafia shares at $3.10 per share. The placing is expected to close on or about October 15 this year.
Aleafia will reach an annual growing capacity of 38,000 kg in 2019, while Canabo Medical Clinics are the largest brick and mortar medical cannabis clinic network in Canada with 22 locations and over 50,000 patients.
Shares in Aleafia Health Inc shot up over 20% to $3.73 in Toronto.