Unrivaled Brands Inc (OTCQX:UNRV) told investors it has reopened its Blum San Leandro dispensary, spun off two Oregon assets, and named Sabas Carrillo as its chief executive officer, Tracy McCourt as its chief revenue officer, and Jim Miller as its chief operating officer.
The vertically integrated cannabis company noted that Carrillo has served as interim CEO since August 2022 and will now serve as CEO and as a member of its board of directors.
In an operational update, Unrivaled also said it closed on a Management Services Agreement (MSA) with Brick City Productions Inc to re-open and fully operate the San Leandro dispensary, including operations management, inventory management, labor administration, vendor relations, and customer service for a term of 12 months.
READ: Unrivaled Brands posts revenue of $10.76M for Q3 2022
Brick City Productions, as the operator, is also providing the working capital required to re-open the store under a promissory note providing for up to $400,000. As consideration for such services, Unrivaled said it will pay a management fee equal to 25% of the gross revenue less discounts, refunds and credits payable in shares of the company’s common stock at the completion of the MSA.
The company will receive a monthly fee equal to 4% of the gross revenue of the San Leandro dispensary. In addition, the operator will dedicate and use up to 50% of the San Leandro dispensary to sell its licensed products.
“I’m grateful to the Brick City team for jumping in and reopening the store for us and for providing the working capital needed,” Carrillo said in a statement.
“The Brick City team has been operating cannabis retail for over 20 years and has a track record of opening and operating over 10 cannabis retail among other cannabis assets including cultivation, manufacturing, distribution and brands. This partnership represents a catalyst for our teams continuing to work together on other near-term projects,” he added.
As part of a restructuring to focus on its California operations, Unrivaled said it sold its equity interests in LTRMN, Inc., which conducts cannabis distribution and wholesale activities in Oregon, to Buchanan Group, LLC and an unaffiliated third-party buyer, for an aggregate purchase price of $250,000.
It also disposed of its 50% equity interest in Psychonaut Oregon LLC to Joseph Gerlach for an aggregate purchase price of $1. Gerlach owns the other 50% of the equity interests in Psychonaut and is also the company’s chief cultivation officer. As part of the transaction, Gerlach assumed a five-year lease liability of $500,000 in remaining lease payments along withe the assumption of all operational liabilities and expenditures, including payroll and related expenses for Psychonaut employees.
In connection with the sale of Psychonaut, Unrivaled said it entered into an unsecured promissory note on December 28, 2022, under which it will consolidate all current liabilities due to Gerlach totaling $153,798. The Psychonaut Note accrues interest at a rate of 1% per annum and is due and payable on the fifth anniversary of the date of issuance.
“The completion of the spinoff of the LTRMN and Psychonaut Oregon assets will allow the company to focus on California operations and more effectively allocate our resources and capital as well as streamline our operations,” Carrillo said.
Executive appointments
Commenting on the new executive appointments, Unrivaled noted that McCourt is a leader and pioneer in retail, marketing, e-commerce, sales and product management bringing over 20 years of experience.
She has developed growth strategies for highly successful brands including Zappos, Skechers, Guess, Murad, Frederick’s of Hollywood, and most recently, MedMen Enterprises Inc, where she also served as chief revenue officer.
Miller most recently served as chief financial officer of Operators Only Inc, a cannabis operations service provider supporting Cookies-branded retail and cultivation licensees, from January 2022 to October 2022.
He was corporate controller at 3PL Central LLC, a private equity-owned eCommerce WMS provider, from February 2020 until December 2021. Before that, he served as interim chief financial officer and was the vice president of Accounting at MedMen Enterprises Inc from January 2018 until December 2019.
"I am delighted to be adding two formidable executives to our management team that bring years of cannabis retail experience, e-commerce, real estate, public company operations, and are the kind of executives that roll up their sleeves and jump in,” said Carrillo. “With Tracy and Jim on our team, we look to leverage their leadership, strategic planning, industry connections and their bias for execution to contribute to the success and durability of the company.”
Contact the author at stephen.gunnion@proactiveinvestors.com