Cannabis operator Goodness Growth selling Vireo Health of New York

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Image of a sold sign on a property on the market

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Cannabis multistate operator Goodness Growth Holdings is selling its subsidiary Vireo Health of New York (VireoNY) to Ace Venture Enterprises for $3 million-$5 million as the company works to amend a credit agreement with its secured lender.

Minneapolis-based Goodness Growth – which changed its name from Vireo Health in 2021 – announced the acquisition in a late Monday news release with its fourth-quarter results.

In a second release issued Monday night, Goodness Growth described Ace Venture Enterprises as a “corporate partner” of “Ace Ventures, LLC, a minority-owned business in the state of New York” founded by TV and film producer Steven Acevedo.

Under the deal, Ace Venture Enterprises will:

  • Purchase VireoNY’s licenses, inventory and assets.
  • Take over VireoNY’s lease agreement with Innovative Industrial Properties (IIP) for a marijuana cultivation and manufacturing facility in Johnstown, New York.
  • “Assume VireoNY’s financial liabilities, including its operating losses,” as of April 1.

“These activities are expected to be supported initially by a $2.5 million unsecured loan from Goodness Growth to VireoNY,” according to the release.

Goodness Growth and Ace are also “committed to a collaborative advisory agreement that retains Goodness Growth’s management and compliance oversight in return for an approximate 15% share of net profits.”

Ace has agreed to invest $20 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.”

In a statement, Goodness Growth interim CEO Josh Rosen said the company remains “out of compliance with the covenants in our credit agreement.”

“We are in the midst of ongoing, productive conversations with our secured lender, Chicago Atlantic, to extend our credit agreement and remain committed to divesting (from) New York,” said Rosen.

The VireoNY deal with Ace, which is subject to regulatory approval and “secured capital commitments,” is expected to close by June 30.

Goodness Growth posted a $25.6 million net loss for 2023, according to the company’s financial statement.