ACE Ventures plans to acquire assets of Goodness Growth Holdings subsidiary, Vireo Health of New York ("VireoNY"), pending the satisfaction of closing conditions, including secured capital commitments and regulatory approval.
Terms of the transaction include a purchase price between $3.0 and $5.0 million for Vireo Health of New York's licenses, inventory, and assets, as well as Ace's assumption of the lease agreement with Innovative Industrial Properties ("IIP") for the Johnstown, NY cannabis cultivation and manufacturing campus. Ace has agreed to assume VireoNY's financial liabilities, including its operating losses, beginning on April 1, 2024. These activities are expected to be supported initially by a $2.5 million unsecured loan from Goodness Growth to VireoNY.
In addition, the parties are committed to a collaborative advisory agreement that retains Goodness Growth's management and compliance oversight in return for an approximate 15 percent share of net profits. Goodness Growth and Ace anticipate regulatory approval for the transfer of the New York licenses, as well as the closing of the VireoNY transaction, to occur by June 30, 2024.
Lease Amendment for Johnstown, NY Cultivation and Manufacturing Campus
Goodness Growth also announced in conjunction with the VireoNY transaction that it has executed an eighth amendment to its lease with IIP for the Johnstown, NY, cannabis cultivation and manufacturing campus. The amendment to the Johnstown campus lease extends a lease termination option until June 30, 2024, and adds a purchase option of the facility for the tenant.
Ace Venture Enterprises, Inc. is committed to providing an investment of $20.0 million to fund the development of the license and support the transfer of the IIP lease and intends to acquire the Johnstown cannabis cultivation and manufacturing campus from IIP by executing the two-year purchase option.
Management Commentary
Steven Acevedo commented, "We are thrilled to reach this agreement with Goodness Growth and are excited to enter New York's cannabis industry. We are prepared to showcase the strength of our team and to support a thriving industry in New York that benefits both consumers and communities that have been impacted by the failed War on Drugs. With more stores opening regularly, our timing feels impeccable, and we're pleased to have Goodness Growth's continued involvement in the management of our operations. After spending considerable time with their team and observing the success they've had with renewed operational focus in Maryland and Minnesota, we see great benefit to a collaborative relationship that helps ensure long-term success for both of our organizations."
Goodness Growth Interim Chief Executive Officer Josh Rosen said, "We're excited to support the Ace team as they bring the benefits of a tremendous legacy within the industry and a deep network of relationships that we believe can help both Ace and Goodness Growth thrive moving forward. Execution in New York is the first priority, and we are eager to support Ace's entry into New York's wholesale market as soon as practicable following regulatory approval of our Registered Organization Non-Dispensing (ROND) license. We also anticipate meaningful opportunities for future collaborations with the Ace team."
For more information:
Goodness Growth Holdings
www.goodnessgrowth.com