Putting behind them the drama of 2021 which resulted in their former Chairman’s offices being raided by Australian Federal Police, medicinal cannabis company Creso Pharma (ASX: CPH) has kicked off the new year with a bang, confirming their entry into the lucrative US market through the acquisition of Sierra Sage Herbs.

Founded in 2008 by Jodi Scott in Denver, Colorado, Sierra Sage Herbs has grown from selling cannabis products at local farmers markets to now being distributed in more than 110,000 locations across the US, including national retailers CVS Pharmacy, Walgreens and Walmart. The cannabis company’s flagship product is Green Goo which is a non-cannabinoid product used for beauty care and first aid. Other products manufactured by Sierra Sage Herbs include their sexual wellness product line Southern Butter and cannabinoid-infused Good Goo which was launched in 2020.

Via the acquisition which will be funded from the issue of $21 million in CPH shares at an Issue Price of $0.083 each, Creso Pharma intends to utilise Sierra’s retail network to sell their existing range of cannabis products, giving instant penetration of the lucrative US market. Over the coming months, Sierra expects their retail network to add a further 20,000 distribution points where Creso will benefit from Sierra’s understanding of the domestic market and vital retail partnership to increase product reach.

“The acquisition of Sierra Sage Herbs and the company’s product range is a major milestone for Creso Pharma. It marks entry into the US CBD market and provides a strong foundation to rapidly scale up operations, product development and sales, as well as further M&A transactions,” said Creso Pharma CEO, Willam Lay.

“We intend to aggressively leverage these relationships and the group’s existing customer base by introducing them to Creso Pharma’s existing product suite for human health, animal health and sports and recovery.”

Originally founded when Jodi Scott began experimenting with various herbs, drying them out on old screen doors, she infused them into oils for personal use. Within one year, she would be selling them at local farmers markets before traveling to festivals to sell them.

By 2019, Sierra Sage Herbs was generating USD $4.7 million in sales revenue per annum which increased to $6.7m in 2019 and $8.0m in 2020.

As a result of ongoing negotiations with Creso Pharma which pushed back a planned capital raise, Sierra Sage Herbs’ sales dropped to $5.7m in 2021. However, given the circumstance of the decline, this was of no concern to Creso.

Upon settlement of the acquisition, which will dilute current CPH shareholders 77.1% ownership of the combined Company, Scott will be appointed to Creso’s Board of Directors and continue with the Company as President of US Operations under a 3-year term.

“We started this company because we knew that plant-based alternatives could do more. We combined our passions for science, wellness, herbology, and wound care into a line of safe, effective all natural products and so began our journey to change first aid as we knew it,” said Scott.

“That seed has become one of the most disruptive CPG brands in personal care – and this is just the beginning. Our team has developed strong operations while building a robust product development capacity and expanding retail relationships exponentially.

“This partnership with Creso will set the stage for accelerated growth across multiple categories. Together, we will be able to expand portfolios and make synergistic acquisitions in even more meaningful ways.

“We are thrilled for this next phase in our journey as part of the Creso family and look forward to continuing our tradition of developing high-quality, non-toxic, incredibly effective products that our customers love, while continuing to preserve our mission of spreading goodness globally.”

Creso expects to hold an extraordinary general meeting with shareholders by March 2022 to approve the acquisition and issue of new CPH shares.

In November 2021, Creso Pharma made national headlines for all the wrong reasons when its former Chairman, Adam Blumenthal had his EverBlu Capital offices raided by Australian Federal Police and ASIC. Those investigations are ongoing but resulted in Blumenthal stepping down from his role at Creso with three new Director appointments made, including Lay who was appointed as CEO and Managing Director.