SEC Shuts Down Share Sales for Hightimes Holding Corp

NEW YORK – Media reports this week said iconic cannabis brand Hightimes Holding Corp.—parent company of High Times magazine—has been prevented from selling shares to investors. The stop order came from the Securities and Exchange Commission (SEC), which cited Hightimes’ failure to file its annual earnings report that was due in June.

After initially announcing plans to go public in July 2017, Hightimes’ path to being publicly traded has seen multiple delays and several forward-looking, multi-million dollar acquisitions of various cannabis businesses, which were announced by the company only to fall through or received no further comment from Hightimes.

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In July 2018, Hightimes announced its intentions to sell stock to investors through a crowd-sourced IPO, prior to listing on the Nasdaq index; at the time, the company also announced former President of Mexico Vicente Fox Quesada had joined its board of directors.

“The Regulation A+ filing allows investors to buy common stock shares in High Times without waiting until the Nasdaq listing. Investors can buy one of the first cannabis-related stocks expected to go public,” Hightimes said in 2018.

The company also said that it hopes to list over-the-counter (OTC).

Since 2018, the company has experienced what some have called a “revolving door” in its C-suite. Hightimes Holding Co. board chairman and current Chief Executive Officer Adam Levine, who bought High Times in 2017 with a group of investors, recently announced a series of high-dollar, high profile acquisitions.

The company acquired “[email protected] Enterprises Inc. in Redding [California] and 530 Collective in Shasta Lake [California] in exchange for $350,000 and $150,000 in cash, respectively,” the L.A. Business Journal said in June. The acquisitions followed closely behind an $80 million dollar deal to acquire thirteen dispensaries locations in Arizona, from Harvest Health & Recreation, Inc.

Earlier in June, Hightimes made a licensing deal with Canadian company Red, White & Bloom Brands, Inc., to add eighteen dispensaries in Illinois and Florida to its portfolio. The stores will be rebranded as “High Times” dispensaries.

The brand also recently made a deal to acquire California-based cannabis delivery service Mountain High Recreation, Inc., in an all-stock sale worth $2.8 million.

Like most multimedia companies that have been affected by the COVID-19 pandemic, High Times previously saw most of its revenue come from live events, including popular High Times Cannabis Cup Awards and consumer cannabis shows, which now have been halted for the foreseeable future due to social distancing.

Live events that attract massive crowds have been cancelled globally for 2020, and are unlikely to be rescheduled until 2021, if then. Efforts to expand into retail product sales make sense for Hightimes, in an attempt to make up for greatly reduced revenues from live events.

Questions have been raised by financial pundits and insiders regarding Hightimes’ valuation, as well as acquisitions and actions taken. Investors were due to receive “updated financial information” in mid-June, but reportedly have not yet received information from the company.

Speculation continues to swirl around the source of funding for multiple acquisitions, how recent deals might affect the earnings report, executive comings and goings, as well as whether or not the iconic magazine will be able to weather the transition from print advertising to online advertising revenues. The company also has been plagued with lawsuits.

Lack of transparency over several years of announcements by Hightimes—with still no stock index listing in sight—has caused many to wonder if the company will survive.

In December 2019, mg Retailer reported on High Times’ most recent filing with the SEC, and quoted the company’s statement: “Because of recurring operating losses, net operating cash flow deficits, and an accumulated deficit, there is substantial doubt about the company’s ability to continue as a going concern for one year from the issuance of the financial statements.”

“The company’s debt load appears to be the result of aggressive expansion predicated on a planned 2018 initial public offering on the NASDAQ or OTCQX. Hightimes Holding delayed the offering, focusing instead on an interim crowd-sourced IPO launched in July 2018. The effort stalled after raising $15.2 million, far short of the maximum $50 million the company projected and nowhere near the liquidity required for the stock to trade on public markets,” mg Retailer commented at the time.

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