Cronos Group Inc. says it has entered into an agreement to sell and lease back its Stayner, Ontario facility known as the “Peace Naturals Campus.”
The agreement, once fulfilled, would see Future Farmco Canada Inc. buy the facility from Cronos for $23 million in cash. Peace Naturals was one of the first licensed commercial medical cannabis facilities in Canada, licensed in October 2013. Cronos significantly expanded the site in 2017 into the cannabis campus.
Cronos acquired Peace Naturals in 2016, taking on all issued and outstanding shares of Peace Naturals Project Inc. In 2019, Altria, an American tobacco company, became the largest shareholder in Cronos Group.
The new deal with Future Farmco Canada Inc., a vertical farming company, will allow Cronos to continue to utilize part of the Peace Naturals space through the leaseback agreement.
“The sale-leaseback of the Peace Naturals Campus supports Cronos’ goal to reduce costs across the Company,” said Mike Gorenstein, Cronos Chairman, President, and CEO. “More specifically, this sale will aid in improving the gross margin profile of our business, while lowering costs and increasing our agility. This sale only strengthens our industry-leading balance sheet and allows us to continue to pursue organic growth and future transactions that bolster Cronos’ existing value. We do not expect any interruption to our current operations and plan to carry out existing growth plans within our leased space at the facility.”
The deal still needs to be approved by the buyer after 180 days.