Akerna will acquire Toronto-based Trellis, a cannabis cultivation management and compliance software company, for US$2 million in an all-stock deal. Trellis was backed by Casa Verde Capital, the venture capital firm of rapper Snoop Dogg, Argonautic Ventures, Gateway, One Gun and others.
DENVER, April 08, 2020 (GLOBE NEWSWIRE) — Akerna (Nasdaq: KERN), a leading compliance technology provider and developer of the cannabis industry’s first seed-to-sale enterprise resource planning (ERP) software technology (MJ Platform®), will acquire cannabis cultivation management and compliance software company Trellis for $2.0 million in an all-stock deal. The deal is expected to close later this week.
“Trellis has built a great product that has attracted an impressive list of well-known California operators,” said Jessica Billingsley, CEO, Akerna. “We’re excited to be able to plug Trellis into our compliance bus, leverage our infrastructure, and profitably take Trellis into new markets where Akerna has an established presence. Trellis is an ideal fit for Akerna and delivers immediate accretive value to our shareholders.”
The acquisition is a compelling strategic fit for Akerna, expanding Akerna’s TAM into SMBs by providing a lighter-weight cultivation product. Akerna will leverage its existing product development and sales infrastructure to drive faster and more efficient growth, accelerating the conversion of Trellis’ large revenue pipeline. Over time, Trellis will also serve to funnel clients to Akerna’s enterprise offerings as they grow in size and sophistication. The transaction is expected to contribute positive cash flow and evidences Akerna’s position as the go-to buyer for cannabis technology, executing on the unique advantage of being the only Nasdaq-listed company serving the industry.
“As we looked to raise capital and continue scaling Trellis, I recognized that the environment was quickly changing and that Akerna had an enormous competitive advantage in the marketplace. We made the decision to join a winning team and I’m thrilled that Trellis is now part of Akerna,” said Pranav Sood, founder and CEO, Trellis. “With access to Akerna’s resources, we will be able to provide our clients with additional tools they need to manage their operations, including business intelligence, compliance, reporting, and access to Akerna’s ecosystem of integration partners. Joining Akerna delivers immediate benefits to Trellis’ customers and is the right choice for Trellis.”
Akerna will acquire Trellis for $2.0 million, with 100% of the consideration paid in stock priced at the 30-day volume weighted average price and no assumption of debt. The transaction price is a 1.8x multiple of 2019 revenue of $1.1 million. Trellis’ selling shareholders are entitled to contingent consideration based on net new recurring revenue generated in September 2020, paid in stock, if any.
“In the cannabis industry today, we see consolidation, operational maturation, and a lack of access to capital for smaller players all within the context of growing consumer demand — it’s an exciting time,” said Jessica Billingsley. “Akerna is uniquely positioned to take advantage of the current environment. Our previously announced acquisition of Ample Organics remains on track and our M&A pipeline continues to grow, with target valuations that are becoming increasingly attractive as we execute on transactions like Trellis, proving our status as the go-to buyer for cannabis technology solutions.”
A presentation with more details on the transaction is available in the investor relations section of the Company’s website.
Akerna is a global regulatory compliance technology company. Akerna’s service offerings include MJ Platform®, Leaf Data Systems®, and solo sciences tech platform. Since its establishment in 2010, Akerna has tracked more than $18 billion in cannabis sales. Akerna is based in Denver. For more information, please visit www.akerna.com and follow us on Twitter @AkernaCorp.
Trellis is the developer of cannabis inventory management software designed to optimize workflows and ensure regulatory compliance. The company’s inventory management platform provides tools and analytics for cultivators, manufacturers, and distributors in regulated markets. Trellis enables cannabis businesses to scale their business, while remaining compliant. For more information, visit www.trellisgrows.com.