Staff
EVIO Inc. (EVIO) announced on Monday it has entered into an agreement to acquire 60% of C3 Labs to expand further into Northern California as demand for analytical testing services heats up. EVIO CEO William Waldrop said that the proposed C3 Labs deal would give EVIO, based in Bend, OR., access to an 8,000 sq. ft. lab and become EVIO’s Northern California hub laboratory.
“Outfitted with the latest analytical testing equipment, the laboratory is prepared to commence testing to meet California’s January 1, 2018, Cannabis testing requirements,” Waldrop said in a release, announcing the proposed acquisition. “C3 Labs have been serving the cannabis industry for years, providing product formulation, research, and development services that align with EVIO’s longer-term strategy to expand our scope of services.” EVIO currently has nine testing laboratories in five states.
Waldrop added that the deal allows EVIO to focus on taking market share in California, as demand for testing services throughout the state is “expected to increase significantly.” The companies expect the acquisition to close by the first quarter of 2018 and is subject to customary closing conditions, including due diligence from both C3 Labs and EVIO, as well as applicable local authorities.
California Deals Increase
According to ICF, the California marijuana market is projected to be $7 billion by 2020. This has caused a flurry of deals to happen as companies try to get ahead of the growth. Canadian-based CannaRoyalty recently acquired Bhang vaporizer company Kana Management and Bhang’s distributor Alta Supply company. Toronto-based Nutritional High acquired California distributor Calyx Brands in November. Also in November, medical marijuana company Cannabis Sciences (CBIS) acquired three dispensaries in the Los Angeles market to speed up its expansion.
Benefits Of The Proposed Transaction
Though C3 Labs has only served the cannabis industry since 2015, it’s been able to accomplish quite a lot in just a short amount of time. The Berekely, Calif.-based C3 was granted a Cannabis Research and Development business license by Berkeley that allows the company to “provide cannabis scientific research, product design, development, and testing.” It’s also one of the country’s first “cannabis-focused contract research organizations,” containing both field services and a research center.
The company uses technologies seen in both the food product and pharmaceutical industries to allow cannabis growers and processors operate with the law and provide what it states as “the highest level of safe and effective medicinal products.”
Retail Cannabis Sales Poised To Surge
The pending deal is the latest sign that retail cannabis sales are poised to surge in the coming years. According to recently released data from ArcView Market Research in conjunction with BDS Analytics, retail cannabis sales are poised to grow 33% from 2016 to nearly $10 billion this year. By 2021, ArcView estimates the legal market will more than double, reaching $24.5 billion.
