Benzinga | Nov 3, 2021 01:08PM EDT

Goodness Growth To Divest Its Arizona Dispensary License For $15M, Plans To Focus On Wholesale Channel

Cannabis company Goodness Growth Holdings, Inc. (CSE:GDNS) (OTCQX:GDNSF) announced Tuesday that it is selling its dispensary license, all remaining inventory and equipment at its Phoenix dispensary, in an all-cash transaction valued at $15 million.

What Happened

The deal between its subsidiary Vireo Health of Arizona, LLC, and Copperstate Farms, LLC, the Phoenix includes the sale of the dispensary property lease and all revenue-producing contracts.

The Minneapolis-based company expects the transaction to close later this year, pending regulatory approval.

The transaction also includes related cultivation licenses for both medical and adult-use cannabis, only one of which is currently operational at the company's 18-acre outdoor farm in Amado, Arizona, south of Tucson.

"Given our presence as a predominantly wholesale supplier of biomass in the Arizona market, our management team and board of directors felt that this transaction simplified our business during a period in which we're prioritizing resources toward the attractive opportunities we see in our other markets, especially New York and Minnesota," Kyle Kingsley, M.D., Goodness Growth's chairman and CEO said.

Goodness Growth Will Continue To Serve Arizona Cannabis Market

In addition, Goodness Growth has entered into a separate cultivation management services agreement with the acquirer for an initial term of five years, subject to renewal for up to 20 years.

The deal will allow goodness Growth to continue cultivating and selling cannabis products through the medical and adult-use wholesale sales channels in the Grand Canyon State.

Kingsley said the company has developed "what we believe is one of the lowest-cost outdoor cultivation facilities in Amado," following the acquisition of Arizona operations in 2019.

"We're pleased to continue operating that facility and servicing the wholesale market in Arizona through our management services agreement," Kingsley added.

More recent news from Goodness Growth:

* Goodness Growth's Whole Flower Products Now Available In Several New York Cannabis Dispensaries

* Cannabis REIT IIP To Fund $56.2M Goodness Growth Development In New York

* From Cannabis MSO To Drug Development: Goodness Growth Wants To Understand Traditional Psychedelics Use

* Goodness Growth's Subsidiary Obtains Patent for Cannabis-Based Moist Snuff Products

* Goodness Growth Q2 Revenue Slightly Above Estimates - Hits $14.2M Representing 16.5% YoY Growth; Josh Rosen Appointed To Its Board Of Directors

GDNSF Price Action

Goodness Growth's shares moved 1.34% lower at $1.44 per share after the market close on Tuesday.

Photo: Courtesy of Goodness Growth Holdings, Inc.