… overpriced and over baked.

Acreage Holdings, Inc. (CSE: ACRG.U) and Form Factory, Inc. ("Form Factory"), a multi-state manufacturer and distributor of cannabis-based edibles and beverages, announced they had signed a definitive agreement for Acreage to acquire Form Factory, in an all-stock transaction valued at US$160 million.

Kevin Murphy, Founder, Chairman, and Chief Executive Officer of Acreage Holdings said, “It sets the stage for Acreage to become the first national cannabis Consumer Packaged Goods (CPG) company, capable of creating and distributing predictable and scalable proprietary brands, nationally, delivering those capabilities on a contract basis to other cannabis brands, and offering a turnkey cannabis industry solution to traditional non-cannabis CPG companies like Nestle, Mars or Procter & Gamble.” Based on our analysis of the $160 million transactions, the duplicated or replacement value of the purchase is less than $7 million. What Acreage Holdings bought is an “idea” with the possibility of “becoming a Procter & Gamble.” The chances of that happening must be greater than a billion to one.

What did happen, Acreage Holdings paid $153 million for goodwill.

A look under the hood of Acreage Holdings disclosed the same Consensus Business Model followed by all of the public cannabis plays – over-capitalization, compromised balance sheet and promises that will never be kept to shareholders.

Acreage Holdings has a market capitalization of $831 million, $1.98 book value and $9.45 million in sales. How the company valued the Form Factory acquisition must have been the prize found in the Crack Jack box? Mr. Murphy further said. “Creating a wide range of products that meet the diversified tastes of consumers and owning the national manufacturing and distribution platform to ensure their consistent and predictable delivery on a national basis is a key to long-term success and value creation in the cannabis industry."

Can be accurate but not at the moment.

In our opinion, Form Factory does not have the business model in place, nor the ability to execute. Without local brand recognizing, you cannot create national brand awareness.