Canadian Firm Buys Colorado CBD Company in $75 Million Deal

Balanced Health Botanicals, one of Colorado's largest CBD companies, has been acquired by a Canadian hemp firm in a multimillion-dollar deal.

Headquartered in Englewood, Balanced Health Botanicals founded CBDistillery, a line of hemp-derived CBD products. After its launch in 2016, CBDistillery quickly became a popular e-commerce CBD brand across the country, ranking in the top five CBD companies, with more than 30,000 orders a month as of this year.

Vancouver-based Village Farms operates in a country where all forms and derivatives of cannabis, including THC, are federally legal. It had been looking to break into the United States CBD market, which was valued at nearly $5 billion in 2020. The Canadian firm targeted the privately held Balanced Health Botanicals as an entry partner, and eventually agreed to a full acquisition valued at $75 million.

Balanced Health Botanicals ownership will receive $30 million in cash and $45 million in Village Farms stock, according to an August 16 merger announcement. Executive leadership will stay aboard after the merger, according to Balanced Health Botanicals CEO Chase Terwilliger.

“We are ecstatic to join forces with Village Farms, a leader in the global cannabis and CBD industries,” Terwilliger says. “As part of the Village Farms organization, we will be able to take the next steps in our growth strategy, with the opportunity for prudent, return-focused investments, to further expand our market share and drive efficiencies, with a focus on continued profitability.”

Under a new business strategy for the U.S., Village Farms plans to scale CBDistillery's web presence and "leverage Village Farms’ long-standing relationships as a produce supplier to its grocery and large-format retailers," according to the company. While hemp-derived CBD oils, edibles, capsules and other products remain unregulated by the United States Food and Drug Administration, they are sold online and even in national grocery chains.

Although CBD is still considered a growing industry, the non-intoxicating cannabinoid has lost some popularity over the past year with the emergence of modified cannabinoids such as Delta-8 THC and the further spread of state marijuana legalization. Reports of surplus hemp biomass and dropping CBD prices surfaced in 2020, but Village Farms CEO Michael DeGiglio is confident that CBD's market potential has yet to be realized as the FDA continues to consider nationwide regulations on CBD as a dietary ingredient.

"As a well-established, profitable leader in the U.S. retail CBD market, Balanced Health is the right opportunity, at the right time, to take our next major step forward in anticipation of regulatory clarity that will propel the growth of this nascent market," DeGiglio explains in a statement.

With experience in the vertical integration of hemp and marijuana businesses in Canada, DeGiglio hopes that the Balanced Health Botanicals deal and the recent acquisition of a 5.5 million-square-foot greenhouse operation in Texas will create a pathway for Village Farms to enter America's legal marijuana market when the time comes.

“Importantly," DeGiglio notes, "the addition of the Balanced Health platform provides us with another potential pathway to participate in the U.S. high-THC cannabis market, when permitted to do so, that could enable us to more rapidly access the market, in advance of our plans to convert our more than 5.5 million square feet of high-tech greenhouse facilities in West Texas — one of the most favorable environments for cannabis cultivation in the continental U.S. — for large-scale, low-cost production of cannabis."