Goodness Growth and Grown Rogue today announced that they have entered into a strategic agreement whereby Grown Rogue will support Goodness Growth in the optimization of its cannabis flower products, with a particular focus on improving the quality and yield of top-grade “A” cannabis flower across its various operating markets, starting with Maryland and Minnesota.
Grown Rogue, based in Oregon, is a renowned craft cannabis operator with proven expertise growing, harvesting, processing, packaging and selling cannabis flower in the most competitive adult-use markets. The company has a relentless focus on driving quality and value through efficient standard operating procedures and superior genetics, which has resulted in Grown Rogue becoming the number one flower brand in Oregon and a top five indoor flower brand in Michigan. Goodness Growth is a Minneapolis-based operator whose medical expertise helped its team build a portfolio of merit-based medical license awards, which are all currently experiencing transitions to adult-use regulatory frameworks.
Under the terms of the agreement, which expires on September 30, 2025, Goodness Growth will provide compensation to Grown Rogue for sustained consulting support, including input on systems and processes, and recommendations to improve Goodness Growth’s cultivation operations. Grown Rogue will be entitled to receive additional incentive compensation if its services result in improved cash flow performance as compared to Goodness Growth’s baseline expectations over the term of the agreement. Grown Rogue’s cooperation in the agreement will be on an exclusive basis to Goodness Growth within the markets in which Goodness Growth operates.
In addition, Goodness Growth will issue 10,000,000 warrants to purchase subordinate voting shares of Goodness Growth to Grown Rogue, with a strike price equal to a 25.0 percent premium to the 10-day volume weighted average price (“VWAP”) of Goodness Growth’s subordinate voting shares prior to the effective date of the agreement. Similarly, Grown Rogue will issue 8,500,000 warrants to purchase subordinate voting shares of Grown Rogue to Goodness Growth, with a strike price equal to a 25.0 percent premium to the 10-day VWAP of Grown Rogue’s subordinate voting shares prior to the effective date of the agreement. The warrants exchanged in the agreement will be issued with five year terms to exercise, shall not be registered with the United States Securities & Exchange Commission or qualified by any Canadian provincial securities commission, and shall not be assignable except as set forth in the warrant certificates. The parties intend to issue the warrants within 60 days. The aforementioned warrants and shares underlying such warrants will be subject to a four-month and one-day hold period under applicable Canadian securities laws.