Grown Rogue Partner Exercises Option and Acquires 60% Controlling Interest of Golden Harvests

Rhea-AI Summary

Grown Rogue International (CSE: GRIN, OTC: GRUSF) has announced that its partner, Canopy Management, LLC, has acquired a 60% controlling interest in Golden Harvests, LLC. This strategic move aims to boost Grown Rogue's expansion in the rapidly growing Michigan cannabis market. Canopy, controlled by CEO Obie Strickler, has received regulatory approvals and plans to exercise an option for an 87% ownership in Canopy. The deal involves a payment of USD$660,000 and the issuance of 600,000 shares in Grown Rogue.

Positive

• Acquisition of 60% interest in Golden Harvests enhances market presence in Michigan.
• Golden Harvests has a strong operational facility with plans to expand production.
• Strategic partnership with Canopy Management supports Grown Rogue's growth objectives.

Negative

• Significant cash and share issuance may dilute current shareholder value.

Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTC: GRUSF), a multi-state cannabis company with operations and assets in Oregon and Michigan, announced today that its partner, Canopy Management, LLC (“Canopy”), has acquired a 60% controlling interest in Golden Harvests, LLC (“Golden Harvests”). Canopy is controlled by Grown Rogue’s chief executive officer, Obie Strickler (“Strickler”). In order to expedite regulatory approvals, Canopy obtained the option to acquire 60% ownership of Golden Harvests and signed a new agreement under materially similar terms to the previous option agreement with GR Michigan, LLC. Simultaneously, Strickler provided Grown Rogue Unlimited, LLC (a wholly owned subsidiary of the Company) a right to acquire 87% of the membership units of Canopy pending state and regulatory approval. Canopy filed all of the necessary paperwork and has received both local and state approval to purchase the 60% controlling interest of Golden Harvests. It is expected that Grown Rogue Unlimited, LLC will exercise its option to acquire 87% of the membership units of Canopy by the end of 2021.

“The Michigan market has grown exponentially, and Golden Harvest remains an important strategic asset for us. Canopy exercising the option is an important milestone for Grown Rogue as we continue our successful expansion into this market,” said Obie Strickler, CEO of Grown Rogue. “We have implemented our best-in-class SOPs and leveraged over a decade of operational, grow, and sales experience, and have seen great results in Michigan as we gain market share. We are excited to finalize this transaction and continue providing consistent and quality flower to retailers and consumers alike.”

GOLDEN HARVESTS FACILITY

Approximately 25,000 sq. ft. of the facility is currently online and operating with seven separate flower rooms, vegetative, clone, packaging, trimming, and other infrastructure required to operate a best-in-class cultivation facility. Golden Harvests currently has four licenses, two medical and two adult use, allowing for production of 7,000 plants. Golden Harvests has applied for four additional licenses as they continue to expand, anticipating constructing 6 additional flower rooms in 2021 to meet the increasing demand for the Grown Rogue branded, proprietary, nitrogen sealed flower jars. Grown Rogue and Golden Harvests anticipate production in 2021 will exceed 3,500 lbs.

Golden Harvests was one of the first licensed Michigan operators receiving a Class C grow license in late 2018, with their first harvest in the spring of 2019. Building on the positive reputation and strong sell of Golden Harvests flower, Grown Rogue has already completed agreements with retail partners across the state and started building long-lasting relationships to drive the top line and profitability for all parties while inspiring, educating, and empowering consumers.

“During the past year, Grown Rogue has brought in a wealth of experience and accelerated our business growth in Michigan,” said Dave Pleitner, founder of Golden Harvests. “This acquisition by Canopy helps us get to the finish line and clears the way for new opportunities and focus in our growing market.”

As part of the acquisition of the 60% controlling interest in Golden Harvests, Canopy will pay the existing members of Golden Harvests an aggregate of USD$660,000 in cash and cause Grown Rogue to issue 600,000 common shares of Grown Rogue (“Shares”) in three tranches:

• Tranche 1 – US$200,000 in cash and 200,000 Shares due February 6, 2021, which was extended for 12 months with US$100,000 cash having been paid and 200,000 Shares issued;
• Tranche 2 – US$260,000 in cash and 200,000 Shares due February 6, 2021, which was extended to August 6, 2021 for consideration of issuing 200,000 Shares; and
• Tranche 3 – US$200,000 is due at exercise of the option plus 200,000 Shares, which has been satisfied in full.

For more information about Grown Rogue please visit www.grownrogue.com

About Grown Rogue

Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning grow team, state of the art indoor and outdoor manufacturing facilities, and consumer insight-based product categorization, to create innovative products thoughtfully curated from “seed to experience.” The Grown Rogue family of products include sungrown and indoor premium flower, along with patented nitro sealed indoor and sungrown pre-rolls and jars.

FORWARD LOOKING STATEMENTS

This press release contains statements which constitute “forward‐looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward‐ looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward‐looking information is not based on

FAQ

What is the significance of Grown Rogue's acquisition of Golden Harvests?

The acquisition provides Grown Rogue a stronger foothold in Michigan's growing cannabis market.

How much did Canopy pay for the controlling interest in Golden Harvests?

Canopy paid an aggregate of USD$660,000 and issued 600,000 shares of Grown Rogue.

What are the future plans for Grown Rogue and Canopy Management?

Grown Rogue plans to exercise an option to acquire 87% of Canopy Management and expand production capabilities.

When is the expected completion date for acquiring the 87% interest in Canopy?

Grown Rogue expects to finalize the acquisition by the end of 2021.

What is the current production capacity of Golden Harvests?

Golden Harvests currently has the capacity to produce 7,000 plants and anticipates over 3,500 lbs of production in 2021.