22nd Century Group Exits Cannabis Industry, Closes Franchise Sale Deal

The 22nd Century Group, Inc. XXII announced on Thursday it has closed its previously announced sale of its hemp/cannabis operations.

The Buffalo-based company said the transaction will significantly reduce the company’s operating costs going forward, a key step in its goal to achieve cash-positive operations.

The sale, combined with the assignment of a non-strategic hemp/cannabis asset in Colorado to the senior lender as a non-monetary transaction, will reduce the company's debt by $3.2 million, with an additional $2 million reduction to come from the Buyer’s payment of a secured promissory note due June 2024.

See also: Cannabis Industry’s New Mavericks: Two Companies Introduce Fresh Leadership

After the assignment of the hemp/cannabis asset and upon the buyer paying the note in full, the remaining outstanding debt principal is expected to be approximately $8.8 million based on the effects of this transaction.

“We are excited to close this transaction and dramatically reduce our operating costs going into 2024, an important step in moving the business to a sustainable, cash-positive operating basis,” Larry Firestone, chairman and CEO of 22nd Century said. “We are also pleased to substantially reduce our debt as we work to create value for our shareholders through an improved balance sheet and full focus on our tobacco assets, including our FDA-authorized branded harm reduction products.”

The insurance proceeds expected to be received in connection with the fire at the company’s Grass Valley manufacturing facility will be used to further reduce the debt.

XXII Price Action

22nd Century Group's shares traded 2.08% lower at $0.188 per share during the pre-market session on Friday morning.

Now read: NASDAQ Hemp And Tobacco Company Slashes Debt, Boosts Savings