Grown Rogue International Inc.(CSE:GRIN) (OTC:GRUSF) has entered a secured drawdown promissory note agreement with ABCO Garden State, LLC, a New Jersey licensed cultivator. As of Friday, July 5th, Grown Rogue owns 44% of ABCO, with an option to acquire an additional 26% of ABCO, subject to regulatory approval.
On May, 31, Grown Rogue, obtained licensing approval with the New Jersey Cannabis Regulatory Commission (CRC) and closed its first option to acquire 44% of ABCO.
"As we reach the final stages of Phase I construction, this additional capital will be used to finish construction and provide the necessary working capital to become operational," stated Obie Strickler, CEO of Grown Rogue. "Our Phase I work has included many of the necessary improvements required to accelerate Phase II completion such as full panel installation, the purchase of on-site HVAC equipment, and the fulfillment of fire safety requirements."
The news comes on the heels of the company reorganizing shares to keep its foreign private issuer status in the US.
Read Also: Grown Rogue Reports Record Q1 Revenue, CEO Calls These Two States 'Primary Growth Drivers'
Key Takeaways
- Grown Rogue will lend up to $3,000,000 to ABCO under the note agreement to support ongoing construction and working capital as ABCO ramps up its operations. On June 25, 2024, Grown Rogue advanced $500,000 to ABCO, representing the first drawdown.
- The note has preferential repayment, and interest on the outstanding principal will accrue at 10.5% per annum.
- The note, including all accrued and unpaid interest, shall be due and payable on June 25, 2025.
"Phase I remains substantially on schedule and on budget, with final occupancy approvals expected later this month and sales anticipated to commence in the fourth quarter," Strickler continued. "Phase II construction is expected to be completed in the first quarter of 2025, with sales anticipated to commence in the second quarter of 2025. With both Phases complete and a total flowering canopy of ~16,000 square feet, we expect to be producing in excess of 1,000 pounds of whole flower per month in New Jersey."
New Jersey's Attractive Potential
According to the New Jersey Cannabis Regulatory Commission, the state reported over $800 million in cannabis sales in 2023, growing more than 44% year-over-year. The fourth quarter sales reached a record with $220 million in sales, growing 7% sequentially. Furthermore, the state's recreational cannabis revenue topped $201 million in early 2024, a substantial rise from the previous year. This boost comes as the number of dispensaries jumped from 24 to 130 within a year, putting New Jersey on track to becoming a billion-dollar market.
Price Action
Grown Rogue shares traded 48.87% lower at 65 cents per share at the time of writing Monday after the close.
- The Green Garden State: All You Need To Know About New Jersey's Cannabis Market
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