Canadian pot company Cronos said Friday it is buying access to the CBD market in the U.S. by acquiring Redwood Holding Group, the firm behind popular CBD beauty brand Lord Jones, for $300 million.
Redwood operates mainly through its Lord Jones brand, which sells CBD-infused lotions, gummies, bath salts and oils. Lord Jones was the first CBD brand to land a spot in beauty retailer Sephora.
The deal gives Cronos a foothold in the fast-growing U.S. CBD market, where consumers are clamoring for beauty products, foods and oils containing the cannabis compound. Congress legalized hemp-derived CBD late last year, making retailers more comfortable with stocking the products.
Shares of Cronos rose nearly 9% Friday, closing at $13.84.
Husband and wife, Robert Rosenheck and Cindy Capobianco, started Lord Jones in 2015. They will join Cronos once the transaction closes, which is expected in the third quarter.
"Our goal is to preserve the integrity of all Rob and Cindy have created, while also learning from them and leveraging Cronos Group's resources to capitalize on the significant demand for skincare and other consumer products derived from hemp," Cronos CEO Mike Gorenstein said in a statement.
The $300 million includes Redwood's estimated cash and debt. Of the $300 million, $225 million will be paid in cash, with the rest paid in newly issued Cronos shares.
Cronos took a $1.8 billion investment from tobacco giant Altria late last year. The deal gave Altria a 45% stake in the company.