Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a craft cannabis company operating in Oregon and Michigan, has announced the expansion of their Oregon craft sungrown capacity with a lease option (“Lease Option”) on a 35 acre-property (“Property”) in Medford, Oregon.
The Property has three tax lots that would allow, under current regulations, 120,000 square feet of additional sungrown canopy space. Under Grown Rogue’s cultivation methods this Property, at full capacity, can produce in excess of 18,000 pounds of craft sungrown whole flower per year. The Property comes with an existing Oregon Liquor Control Commission Tier II licensed farm allowing for 40,000 sq ft of production and the Company intends to transfer the Tier II license from their legacy medical farm in 2023 or 2024 to centralize production, further lowering costs and driving efficiencies.
The Company now controls approximately 100 acres and 6 parcels, that at full capacity can produce, under current regulations, approximately 40,000 pounds of sungrown whole flower annually. The Property is centrally located in the Rogue Valley, near Grown Rogue’s existing indoor and outdoor operations. The Property boasts majestic views of surrounding geographic landmarks, comes with superb senior water rights, and a historic farmhouse that the Company plans to turn into an event space in the future.
“Expanding on our sungrown craft production is consistent with our company’s strategy of win now, and win later,” said Obie Strickler, CEO of Grown Rogue. “This Property will allow us to continue lowering our cost per pound of production and increase profitability metrics in the short term, while positioning ourselves for future interstate commerce. The recent moves in California, the Oregon lawsuit from Jefferson Packing House, and signs from the federal government, all suggest that interstate commerce is likely closer than we previously anticipated,” continued Mr. Strickler. “We are encouraged by the 17% decrease in outdoor weight harvested in Oregon in 2022 compared to 2021 and are experiencing a strong recovery in pricing and demand for flower products. We continue to focus on producing high-quality, low-cost products that delight our customers, allowing us to continue increasing our market share in our states. 2023 is going to be a transformational year for us as we look to expand into several new states where we will bring all the same attributes that have made us the leading producer in Oregon.”
The Lease Option is for one year with the ability to extend for an additional year. Lease payments are $7,500/month with 75% of all lease payments applied to the total purchase price of $1,600,000. 15% is due at closing with an owner carry of three years that is greater of 5% or LIBOR plus 150bps in year 1, greater of 6% or LIBOR plus 150bps in year 2, and greater of 7% or LIBOR plus 150bps in year 3.