Grown Rogue International Inc. announced its New Jersey cannabis cultivator affiliate, which generated $1.8million in first-quarter preliminary revenue. Gross margins ranged between 55 and 60%.
ABCO Garden State, LLC, a New Jersey-based operation of the Oregon craft cannabis company, provided details about its performance as well as financial structure.
ABCO claims to have achieved a cultivation yield of 60 grams per square foot and penetrated over half of New Jersey dispensaries.
Obie Stricler, the CEO, stated in a press release that “I am excited about the early progress we’ve seen in New Jersey in terms of cultivation, post harvest, and sales.” We are seeing high cultivation yields of more than 60g per square foot with a preliminary gross margin of 55-60%.
During the first quarter, ABCO reported that its average selling price for pre-roll and whole flower products was more than $2,500 per kilogram. Strickler said that ABCO is seeing “accelerating reordering trends,” which are “proving our brand value and quality.”
Grown Rogue, which currently holds 44% ownership of ABCO plans to convert this to 70% by fall 2026. That is the first opportunity that New Jersey allows. The company’s investment is primarily made through senior secured promissory bonds that are due for repayment prior to any profits being distributed. As of March 31, the balance, including accrued interests, was $8.2million.
In a news release, CFO Andrew Marchington stated that “the majority of capital Grown Rogue invested in ABCO was structured as secured loans.” The repayment is prioritised to come before profits are distributed to ABCO’s partners. The Grown Rogue investors prefer this deal structure despite the complex financial impact.
ABCO plans a major expansion. Construction of Phase II is scheduled to start in the second quarter. It said that steady state production will double from 500-600 pounds to 1,200 pounds per month. Full capacity is expected in early 2026.
Grown Rogue does not expect to be able to consolidate ABCO financial results before it has acquired 70% of the company. The company will instead provide investors with a pro forma report on ABCO’s operations.