The Friendly Stranger logo is seen in this undated photo. (friendlystranger.com)

Fire & Flower Holdings Corp. announced a deal Monday to buy Friendly Stranger Holdings Corp., the longtime cannabis advocate.

Under the agreement, Fire & Flower will issue 31.1 million shares to acquire the brand making the proposal worth about $23 million based on Fire & Flower's share price of 74 cents on Friday.

Friendly Stranger was a cannabis activist long before the legalization in Canada.

"The acquisition will bring some of Ontario's longest established Cannabis brands into the Fire & Flower portfolio, transforming us into a multi-banner operator that appeals to a larger cross-section of cannabis customers," Fire & Flower chief executive Trevor Fencott said in statement.

"We are also excited to add Friendly Stranger's demonstrated expertise in the high-margin accessories business to our team."

Friendly Stranger is expected to own and operate 11 licensed cannabis retail stores in Ontario at closing with an additional four stores in the queue to be licensed and operational by the end of the fourth quarter of 2020.

The stores operate under the Friendly Stranger, Hotbox and Happy Dayz banners and are expected to continue under the same brands.

Concurrent with the deal, Fire & Flower also signed a loan agreement that allows Friendly Stranger to borrow up to $2 million to be used for the purchase of certain licensed cannabis retail stores.

The loan is secured by Friendly Stranger assets and bears an interest rate of one per cent per year that will be increased to 13.0 per cent if the deal to be acquired by Fire & Flower is terminated before it is completed.

Upon closing, Fire & Flower said it is expected to have a total of 66 stores including 18 in Ontario and nine additional stores in the queue for licensing.

This report by The Canadian Press was first published Nov. 2, 2020