Debra Borchardt
Cannabis publisher Hightimes Holding Corp. posted a new filing with the SEC announcing that it made a deal back in April to buy a consumption lounge in West Hollywood CA called The Mezz. The deal apparently took place on April 8, 2022 as High Times entered into a Membership Interest Purchase Agreement with Courtney Zalewski, as manager of The Mezz La Brea, LLC, and the holders of a majority-in-interest of the issued and outstanding membership interests in The Mezz. According to the filing, The Mezz sold for $6 million consisting of $1,500,000 in convertible promissory notes and $4,500,000 of Hightimes Class A common stock.
High Times can no longer sell stock in its Reg A offering because the company has not published current financials. It has been three years since investors have been given any financial information about the company. A couple of months ago some High Times investors took to Reddit to say they had received correspondence from the company about their shares, but since the shares don’t trade and could potentially never trade, the value is zero.
High Times will still need to get regulatory approvals from the City of West Hollywood and the California Department of Cannabis Control for the transfer control of The Mezz’s cannabis licenses from the Sellers to Hightimes. In addition to buying the lounge, High Times entered into a Management Services Agreement, dated May 6, 2022, with The Mezz to provide certain management and administrative support services to The Mezz. So, even though the sale hasn’t been approved yet, High Times will receive all of the income from The Mezz’s operations, minus The Mezz’s expenses, during the period the Management Services Agreement is in effect.
Successful Lounge?
Apparently, The Mezz either hasn’t been making enough money to pay the rent or was just not well run. The Mezz owed $1,073,727 in back rent under a lease agreement signed April 5, 2019. “Under the terms of the Lease Amendment, the Company agreed to pay $200,000 to Lessor in full satisfaction of the Back Rent owed, and to pay, or cause The Mezz to pay, an additional security deposit in the amount of $126,624 to Lessor as a security deposit, plus $42,208 in rent for the month of May 2022.” The base rent on the space is $35,000 a month.
That High Times is agreeing to pay the back rent on The Mezz location at the same time the company was taken to court in San Francisco for not paying the back rent on the Have A Heart dispensary is ironic.
Reg A Extended – Again
High Times, once again extended its offering. This time to September 20, 2022. The filing states, “The Offering is presently paused pending the Company’s completion of an audit of its 2019, 2020 and 2021 annual consolidated financial statements and preparation of unaudited consolidated financial statement for the six months ended June 30, 2020 and June 30, 2021, as well as the filing with the SEC of the Company’s annual reports on Form 1-K for the years ended December 31, 2019, 2020 and 2021 and the Company’s semi-annual reports on Form 1-SA for the six months ended June 30, 2020 and 2021.”
