MedMen Enterprises Inc. Announces LitHouse Farms to Manage California and Nevada Cultivation Facilities in Conjunction with Cash Flow Accretive Foundry Works Partnership
October 01, 2021 at 09:16 am EDT
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MedMen Enterprises Inc. announced that LitHouse Farms has agreed to manage cultivation and manufacturing at each of the two approximately 45,000 square foot, Dutch greenhouse, cultivation and production facilities that MedMen leases in Desert Hot Springs, California (“DHS”) and Sparks, Nevada (“Sparks”). LitHouse will expand its current California production, enter the Nevada market for the first time and produce flower for MedMen’s private label line MedMen Red. Licensed operations at the facilities will be carried on under management agreements with subsidiaries of LitHouse, which management agreements include purchase options for nominal consideration, subject to regulatory approval. Concurrently with the transaction, Foundry Works Inc., the parent company of LitHouse Farms, has signed a sublease agreement for DHS worth approximately USD 3.2 million per year in its first year, ramping to approximately USD 4.6 million per year in its sixth year, subject to 3% annual escalators thereafter through March 2039. At Sparks, Foundry Works has signed a sublease agreement worth approximately USD 2.4 million per year in its first year, ramping to approximately USD 3.4 million per year in its sixth year, subject to 3% annual escalators thereafter through January 2039. In addition, MedMen and Foundry Works also announced a merchandising agreement covering California and Nevada reflective of MedMen’s retail focus in both states and the two companies’ shared brand vision. Subject to performing in the top half of SKUs sold at MedMen, Foundry Works will have the right to occupy shelf space in-line with MedMen’s current top performing brands. It is expected that Foundry Works will use these rights to feature LitHouse Farms, Sherbinksi’s, Sonder and other future Foundry Works owned brands. MedMen and Foundry Works expect to release exclusive products while supporting these products with marketing and advertising content associated with the merchandising agreements. The two companies also have agreed that Foundry Works will supply the product for the Company’s private label MedMen Red product in California and Nevada.
MedMen Enterprises Inc. is a retail cannabis company with an operational footprint in California, Nevada, Illinois, Massachusetts, and New York. The Company offers a robust selection of high-quality products, including MedMen-owned brands MedMen Red, Moss and LuxLyte, through its premium retail stores, proprietary delivery service, as well as curbside and instore pickup. MedMen Buds, a loyalty program, provides access to promotions, product drops and content. It produces and curates the consumer product assortment for retail operations in its local communities with services and engaging in-store experience, combined with reward, delivery, and e-commerce programs. It also offers buds rewards, where buds members earn points with every purchase, plus exclusive access to drops and deals. The Company also provides gift cards.
MedMen Enterprises Inc. Announces LitHouse Farms to Manage California and Nevada Cultivation Facilities in Conjunction with Cash Flow Accretive Foundry Works Partnership