22nd Century Group sells GVB Biopharma back to founding team

22nd Century’s debt expected to drop to $8.8 million.

22nd Century Group, Inc. has sold GVB Biopharma back to its founding team roughly 18 months after acquiring the hemp ingredient company.

The transaction terms included a cash payment of $1.1 million from Specialty Acquisition Corporation, a Nevada corporation affiliated with current GVB employees, at closing and a secured promissory note for $2 million issued by the buyer to 22nd Century’s senior lender to be paid by the end of June 2024.

Additionally, 22nd Century paid $1.1 million of cash-on-hand toward additional debt reduction and assigned a non-strategic hemp/cannabis asset in Colorado to the senior lender as a non-monetary transaction, resulting in debt reduction of $1 million. After the buyer has paid the note in full, the transaction would result in a cumulative reduction of $5.2 million in outstanding principal, with the remaining outstanding principal expected to be approximately $8.8 million.

"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," stated Larry Firestone, 22nd Century chairman and CEO. "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."

NASDAQ-listed 22nd Century Group acquired GVB Biopharma in May 2022. At the time, GVB Biopharma expected 2022 revenue of approximately $48 million, a 58% increase year-over-year; gross margin in excess of 44%; and positive cash flow. The transaction was expected to more than double 22nd Century’s revenue, be immediately accretive to adjusted EBITDA, and generate positive cash flow from the acquired assets.

GVB Biopharma has returned to being privately held. The company said the transition “allows for a more agile approach in meeting the evolving needs of the global hemp and cannabis markets, while pursuing ambitious growth and excellence in serving its customers.”

"As the hemp industry continues to mature, our vision and capabilities align perfectly with the market's direction," said GVB Biopharma CEO Drew Spiegel. "We are excited to lead the charge in this next phase of industry growth, driven by our commitment to quality, innovation, and our valued customers."

Alyse Thompson-Richards has held many positions with BNP Media, first serving as an intern at Candy Industry Magazine in summer 2012. She joined Candy Industry's staff full time as associate editor in August 2016 after a few years at newspapers in West-Central Illinois, becoming managing editor in March 2019. Alyse has also served on Cannabis Products Insider since March 2019. She has bachelor’s degrees in journalism and Spanish from Western Illinois University.