Luxury cannabis retailer Diego Pellicer Worldwide, Inc. (OTCQB: DPWW) announced that it has executed a series of agreements that will cancel the master lease on its Elizabeth Street cannabis cultivation facility in Denver while maintaining cash flow for DPWW. The company said that a new series of leases and subleases will allow DPWW to reduce its liability exposure in the Elizabeth Street cultivation facility while securing deferred rents due and future sublet payments for 4 years and 8 months, valued at $1,482,824. In addition, a $120,000 deposit on the property is being returned to DPWW.
“We worked collaboratively with the Diego operator at Elizabeth Street to make this a positive transaction as we initiate discussions of a merger,” said Nello Gonfiantini III, chief executive officer, Diego Pellicer Worldwide, Inc.
The company said that initial discussions had begun that would combine Diego Pellicer Worldwide Inc. with Diego Colorado Licensee entities Royal Asset Management, LLC (RAM) and Venture Product Consulting, LLC (VPC). The agreements are structured so that rents due and future sublet payments to DPWW are due and settled upon consummation of a merger, or one business day following the termination of the merger by the Colorado Licensee or one business day following termination of merger discussions by DPWW beginning 18 months from Oct. 1, 2020.
RAM agreed to pay an aggregate $543,916 in 46 monthly payments as scheduled in the terminated sublease, provided, however, that no monthly rent payment will be due Registrant in any month that RAM’s gross revenue and taxes are less than $725,000 derived from its Alameda Street retail marijuana operations, located in Denver.
In September, DPWW executed an agreement to convert debt owed to DPWW from its Colorado licensee’s Broadway dispensary into $300,000 cash and 15.13 percent equity in the newly remodeled dispensary. As equity owners, DPWW joined an investment group that included Cookies, California-based cannabis and lifestyle brand. Gonfiantini III said, “By structuring a deal that returns our invested capital and participates in ownership of the Broadway dispensary, we are furthering the company’s objective to not only invest in the cannabis industry but to be efficient with our capital. Plus, it’s great to be equity partners with Cookies, such a well-respected cannabis brand.”
Also as part of the agreement, DPWW received an additional cash payment in excess of $50,000 as payment in full of a $50,000 promissory note, plus interest due the company. Furthermore, DPWW will be repaid an additional $400,000 of its initial investment in the dispensary at 12 percent interest by August 2022. Cookies has also agreed to extend up to $600,000 as a line of credit to the dispensary. DPWW’s direct ownership in the Broadway dispensary located at 2057 S. Broadway in Denver is subject to approval by the State of Colorado.