The business assets of The Guild San Jose, a California-based, vertically integrated cannabis business, were sold at auction Friday in an apparent first for a marijuana business in the world’s largest MJ market.
The winning bid, $8.25 million, was submitted by San Diego-based retail chain Urbn Leaf, which already operates two shops in San Diego and a third in Seaside.
The Guild San Jose was placed in a receivership Aug. 29 by the Superior Court of Santa Clara County after the business defaulted on a loan of more than $1 million, said Scott Yahraus, a senior project manager at Receivership Specialists, which ran the auction.
Yahraus’ company assumed business operations last September while The Guild San Jose was involved in the legal action.
A judge ordered that the business be sold in order to repay creditors, Yahraus said. An initial buyer, MJardin, backed out, however, which prompted the auction.
The opening bid for the cash-only transaction started at $5 million and increased in increments of $50,000 among four bidders that had to be prequalified to participate in the auction.
Aside from Urbn Leaf, the three other bidders were Calyx Peak Capital, NorCal Cannabis Company and the Law Office of Glew and Kim, Yahraus said.
According to a review of the business provided to the qualified bidders:
- The Guild San Jose had more than $5 million in total retail sales in 2018.
- The business’ assets include a 23,500-square-foot facility with a 2,400-square-foot retail space, two 1,200-square-foot indoor cultivation rooms and 11,000 square feet of vacant warehouse space.
- The Guild San Jose has a municipal operational permit and a temporary state microbusiness license, which allow the company to cultivate, manufacture, distribute and sell marijuana. The company is also registered to deliver cannabis, though the annual permit fee has not been paid.
The $8.25 million from Urbn Leaf will be split among 25 investors in The Guild San Jose, Yahraus said, including several former owners and operators, who were also investors in the company.
“They knew it was coming,” Yahraus said of the former company owners. “Their risk profile was, the business goes out of business, and they get zero. But in this case, it sells for $8.25 million, and they’re going to get something.
“They’re doing very well, given the circumstances.”
Joey Peña can be reached at [email protected]
John Schroyer can be reached at [email protected]
Published at Fri, 07 Jun 2019 21:36:58 +0000