Vertically integrated California cannabis operator Lowell Farms sold its Monterey County processing plant for $19.4 million to New Wilston Associates and entered a leaseback agreement with the company.
Under terms of the deal, Lowell signed a 10-year lease on the 10-acre site, which includes a 40,000-square-foot facility where it cultivates and processes marijuana for its own brands and third-party partners, according to a news release.
Lowell acquired the operation in 2021 for $19.2 million.
As part of the deal, Connecticut-headquartered New Wilston will assume the outstanding principal on the mortgage, accrued unpaid interest and other liabilities totaling $10.3 million.
Lowell said in the release that it expects to gain about $3.5 million after closing and other transaction-related costs.
“The sale leaseback is just one part of our ongoing restructuring efforts to implement cost cutting measures and drive efficiencies in order to best position the company to drive value for our shareholders,” Lowell’s board chair, Ann Lawrence, said in a statement.
The sale comes on the heels of a challenging first quarter for Lowell, which posted a 39% drop in year-over-year sales to $7.5 million and an operating loss of $2.3 million – compared with a $2.5 million loss a year ago.
Lowell is a founding member of a new coalition of California cannabis companies aiming to raise awareness and provide solutions to mitigate a credit crisis threatening to upend the local marijuana industry.
Financial Stability for California Cannabis, which launched last week, is comprised of dozens of cannabis brands, wholesalers and producers aiming to confront complex debt problems facing the world’s largest regulated marijuana market.