RIV Capital Inc., acting through its wholly-owned indirect subsidiary, RIV Capital US Real Estate LLC, and Etain, LLC announced that RIV Capital has entered into a lease agreement with Zephyr, a leading California-based developer, for the development and operation of a planned new flagship cannabis cultivation and manufacturing facility in Buffalo, New York. RIV Capital will sublease the Flagship Facility to Etain upon receipt of necessary regulatory approvals.
Under the lease agreement, Zephyr will develop and lease to RIV Capital two buildings totaling approximately 75,000 square feet. Total development costs for the project are expected to be approximately $30 million, of which RIV Capital will be responsible for $4.5 million. RIV Capital will pay base rent to the Landlord over the term of the lease based on what the company believes is a favorable cap rate applied to the developer's portion of the project costs. The initial term of the lease is for 15 years. RIV Capital and Etain also have the option to expand the leased premises to include additional building(s) of added manufacturing and cultivation space.
The terms of the lease include conditions related to receipt of regulatory and other necessary approvals, including completion of any environmental remediation pursuant to the New York State Brownfield Program. Etain's operation of the Flagship Facility is also subject to receipt of regulatory approval from the New York Cannabis Control Board and the New York State Office of Cannabis Management.
Following receipt of regulatory and other necessary approvals and completion of the Flagship Facility, Etain will have access to a state-of-the-art cannabis cultivation and manufacturing facility that RIV Capital and Etain believe will increase the diversity, breadth, and volume of Etain's product offerings, improve affordability and access for New York patients and consumers, and provide a platform to bring successful, authentic cannabis brands to New York. RIV Capital and Etain also intend to work with Zephyr to implement robust diversity, social equity, and inclusion goals consistent with the legislative intent and objectives of New York's Marihuana Regulation and Taxation Act. This includes the construction of a building that can be used for cultivation and/or manufacturing, which will be located within the premises of the leased site and made available to social equity applicants. Such social equity applicants will share in the security infrastructure comprising the leased premises and will benefit from proximity to Etain, an established New York operator.
As previously announced, the company entered into definitive agreements on March 30, 2022, to acquire ownership and control of Etain and Etain IP LLC, owners and operators of legally licensed cannabis cultivation and retail dispensaries in the State of New York. The company acquired the non-regulated portion of the Etain Companies in the Acquisition's first closing on April 22, 2022. The second and final closing of the Acquisition is planned to occur following receipt of all required regulatory approvals, including from the NY Regulators.
For more information: