Item 1.01 Entry into a Material Definitive Agreement
On November 1, 2021, subsidiaries and an affiliate of Goodness Growth Holdings,
Inc. (the "Company") entered into a Purchase Agreement with subsidiaries and an
affiliate of Copperstate Farms, LLC ("Copperstate") pursuant to which the
Company will sell its Phoenix dispensary and cultivation licenses, dispensary
inventory and equipment, dispensary lease, and all dispensary revenue-producing
contracts to Copperstate for $15,000,010 in cash (the "Transaction"). The
Company expects the Transaction to close during the fourth quarter, subject to
regulatory approval and customary closing conditions. As part of the
Transaction, at the closing, the parties will enter into a Retail Shelf Space
Agreement pursuant to which Copperstate will continue to sell the Company's
cannabis and cannabis products at the Phoenix dispensary for two years, subject
to Copperstate's reasonable quality standards.
As part of the Transaction, at the closing the Company and Copperstate will
enter into a Cultivation Management Services Agreement ("Cultivation Agreement")
which allows the Company to continue cultivating, manufacturing, and selling
wholesale medical and adult-use cannabis and cannabis products in Arizona,
subject to regulatory compliance oversight by Copperstate and payment of a
monthly fee. Under the Cultivation Agreement, the Company will continue its
cultivation operations at its Amado facility at its own expense and will retain
all of its wholesale revenue. The Cultivation Agreement has an initial term of
five years and three five-year renewal terms. The Cultivation Agreement is
subject to termination by Copperstate upon certain actions or inactions of the
Company, including if: the Company engages in intentional, willful, or grossly
negligent acts that could lead to cancellation or revocation of the cannabis
license; the Arizona regulator threatens to file an action to revoke the
cannabis license due to activities at the Company's cultivation facility; the
Company repeatedly fails to cure regulatory violations after notice and
opportunity to cure; or the Company fails to produce any cannabis or cannabis
products for 90 consecutive days.
The foregoing description is qualified in its entirety by reference to the full
text of the Purchase Agreement, which is attached hereto as Exhibit 10.1 and is
incorporated by reference herein.
Item 7.01. Regulation FD Disclosure
On November 2, 2021, the Company issued a press release announcing the
Transaction, a copy of which is attached hereto as Exhibit 99.1 and incorporated
by reference herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. Description
10.1 Purchase Agreement, dated November 1, 2021, by and among S Flower
N Phoenix, Inc., ANR Management, LLC, Arizona Natural Remedies Inc.,
Elephant Head Farms LLC, and Retail Management Associates LLC
99.1 Press Release of the Company, dated November 2, 2021
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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