Grown Rogue International’s (GRIN.C) distribution arm subsidiary signed both a definitive and management services agreement with HSCP, a subsidiary of Acreage Holdings (ACRG.A.U), for two Oregon based facilities earlier this week, according to a press release.
The two facilities, located in Medford and Portland, Oregon respectively, bring Grown Rogue’s indoor capacity to 127,000 square foot. Total compensation to be paid for the acquisition is USD$3 million, to be paid in a series of tranches based on regulatory approvals.
“This strategic asset acquisition further solidifies our commitment to the Oregon cannabis market, which saw a record $1.1B USD in sales in 2020 according to the Oregon Liquor Control Commission, The new indoor facility will more than double our Oregon capacity and yearly production volume and, more importantly, Grown Rogue is positioned to generate $20M USD per year in revenue on a pro-forma basis including $10M USD in wholesale sales in Oregon and a projected $10M USD of revenue from our Michigan partner’s operations,” said Obie Strickler, chief executive officer of Grown Rogue.
The recently constructed facility is five minutes away from GRIN’s original facility, which offers benefits in terms of economies of scale, which should reduce the company’s cash cost to produce at or below $0.80 USD/gram.
Transaction Highlights:
- Added 30,000 Sq Ft state-of-the-art indoor facility + Portland retail dispensary
- Total annual revenue capacity increased to $20M USD
- Further reduces one of the industry’s lowest cash cost of production of $0.80 USD/gram with improved economies of scale
The company expects the facility to be able to produce an estimate of 2,400 pounds of flower for the remainder of 2021, which should translate to USD$2.5 million revenue (against expenses of $1 million) for the partial year. When the company opens up their fourth growing room, their capacity will go up by an extra 5,000 pounds, and add another $6 million in revenue throughout all of 2022.
—Joseph Morton
