Atlanta-based multistate operator Parallel Cannabis is shuttering three facilities and exiting the Pennsylvania medical marijuana market following financial troubles that led to a lawsuit from its landlord, Innovative Industrial Properties Inc. (NYSE: IIPR), alleging almost $6 million in unpaid rent.
According to the Pittsburgh Post-Gazette, Parallel’s subsidiary Goodblend Pennsylvania is closing its two dispensaries and its processing plant, and laying off 76 workers.
“In connection with a strategic review, we have made the decision to withdraw from the Pennsylvania market in order to serve patients in our other, more established markets,” Parallel spokesman Sam Schwartz told the Post-Gazette. “As such, Parallel/Goodblend is working with regulators to establish and execute a closure plan over the next 60 days.”
Goodblend informed the state it will cease operations by Sept. 15 at its dispensaries in Friendship and Erie, and at its manufacturing facility in Pittsburgh, but the Pennsylvania Office of Medical Marijuana have not yet received formal notice of the closures, the Post-Gazette reported.
Earlier that month, Parallel and Innovative are due in local court over Parallel’s failure to meet its 20-year lease, since Parallel hasn’t paid rent since November.
It’s not the only state where Parallel has run afoul of Innovative, whose CEO said during the company’s last earnings call that Parallel also defaulted on rent for another facility in Texas, of which Innovative had regained control.
Separately, Goodblend is struggling to get its own shareholders to agree to liquidate the business, with another pending lawsuit filed by Surterra Holdings, a division of Parallel. That suit alleges that minority owner Medical Bloom, which holds a 25% stake in Goodblend, has refused to agree to a dissolution. Parallel is asking for a court order to force the liquidation in order to pay off Goodblend’s debts, given that the Pennsylvania subsidiary is insolvent, the Post-Gazette reported.
Parallel’s exit also reportedly may cause issues for the University of Pittsburgh School of Medicine, with which Goodblend has a 10-year contract – signed in 2020 – to partner on medical cannabis research, along with a $3 million funding obligation by Goodblend.
The exit from Pennsylvania and the default in Texas leaves Parallel – “one of the largest privately held, vertically integrated, multistate cannabis operators in the United States,” according to its website – with a footprint in Florida, Massachusetts, and Nevada.