New York Group Sells Las Vegas-based CBD Unit at Drastic Loss
New York-based 22nd Century Group recently finalized the sale of its GVB Biopharma unit, a CBD producer, at a significant loss. The company sold GVB for approximately $2.25 million, which is less than 4% of the roughly $60 million it paid for the Las Vegas-based company in a 2022 stock swap transaction.
This sale is expected to reduce 22nd Century’s operating costs going forward and decrease its debt by $3.2 million. Additionally, the buyer has committed to paying a promissory note due in June 2024, further reducing the company’s debt by $2 million. Moreover, 22nd Century retains the right to recoup an unresolved $9 million insurance payout from a 2022 fire at a GVB manufacturing facility in Grass Valley Oregon.
The purchaser, Specialty Acquisition Corp., is a Nevada business “affiliated with current GVB employees.”
Tobacco Assets
With the sale of its CBD unit, 22nd Century is now focused on creating value for its shareholders through an improved balance sheet and full attention on its tobacco assets. The Buffalo, New York-based 22nd Century Group, Inc. exchanged $60-65 million in stock for 100% ownership of GVB in June 2022.
At the time of the acquisition, James A. Mish, 22nd Century’s CEO, suggested that the acquired company could generate positive cash flow “in the near term” and double his company’s income, which was approximately $31 million in 2021. GVB was expected to “add significant commercial scale to 22nd Century’s existing hemp/cannabis franchise,” according to GVB’s earlier statements.
5 billion Doses?
Following Mish’s ousting in July 2023, John Miller was temporarily appointed to lead the company. 22nd Century Group, a highly risky penny stock traded on NASDAQ, is an agricultural biotech company with interests in reduced-nicotine tobacco, hemp, marijuana, and hops. The company claimed it sold more than five billion doses of CBD in 2021.
Although it also owns Goodrich Tobacco Company, LLC, 22nd Century Group has experienced significant losses, with approximately $72 million in losses in the first three quarters of this year. It lost around $52 million in 2022 and roughly $33 million in 2021. Past annual reports consistently show that the company has incurred millions in losses since going public in 2011.
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