Low Times for High Times
It’s a sad fact that many local businesses have closed during the COVID-19 pandemic. However, there can’t be many San Francisco retail stores who were first acquired by private equity investors for an eye-popping $80 million only to lose their high-profile Union Square lease because those same investors simply stopped paying rent.
That’s what happened to one ill-fated San Francisco equity dispensary — and another proposed dispensary in the Richmond District — both of which were acquired by High Times magazine’s parent company, Hightimes Holdings, in a deal that made national headlines. Back in April, when the acquisitions were first announced, Hightimes was fixing to put its name on 13 California dispensaries, two of which were in San Francisco: at 152 Geary Street, and 5600 Geary Boulevard.
Neither of those dispensaries have opened or received permits yet. The 152 Geary Street location did receive Planning Commission approval in February, but SF Weekly reported in May how that shop’s co-owner did not consent to the Hightimes sale, after his ownership stake was flipped to a private equity firm called Interurban Capital Group (ICG), then sold to an Arizona dispensary chain called Harvest Health and Recreation, and then sold again weeks later to Hightimes — all without his permission.
Hightimes has since lost the lease on that 152 Geary Street location, apparently due non-payment of rent. The New York-based real estate agent Thor Equities has listed 152 Geary Street with an ad saying “Space is Available.”
“The rent stopped being paid right after the Harvest Health-ICG acquisition in March 2020,” co-owner Alexis Bronson told SF Weekly. “Interurban Capital Group was responsible for paying the rent. As you know, they were acquired by Harvest Health and then sold to Hightimes Holdings. So the responsibility to pay rent falls on Hightimes now. The point is moot anyway, because the lease is in default.”
On top of that, the second proposed San Francisco dispensary in the deal — which was to open at 5600 Geary Boulevard — has also lost its lease and is listed as available. “We had a deal on it,” a representative from property owner CB Richard Ellis tells us. “The tenant ended up merging with somebody, and they ended up saying ‘Hey, we’re done,’ through COVID and everything else.”
Hightimes did not return requests for comment, but Harvest Health and Recreation did; they passed the past-due rent hot potato back to Hightimes.
“On June 22, 2020, Harvest sold select California retail assets to Hightimes Holdings, including all of the California assets that Harvest had acquired in the Interurban Capital Group transaction.” Harvest director of investor relations Christine Hersey said.
Both of the SF dispensaries were originally to be Have a Heart franchises, before they were sold off to Harvest as part of an $85 million deal in early March, then sold again to Hightimes for $80 million just six weeks later in a deal Hightimes described as a “mostly stock-based transaction.”
It is worth noting here that Hightimes stock does not yet exist. Hightimes has been trying to launch an IPO since August 2018, but SEC filings show they’ve delayed their crowdfunded “mini IPO” at least eight times in the two years since.
The as yet theoretical stock remains tied up in regulatory red tape. The SEC has suspended Hightimes from selling shares because the company missed a deadline for filing their 2019 audited financial reports. Their crowdfunded IPO is effectively blocked from taking more investments until those documents are submitted.
Yet Hightimes is still soliciting investments online, for $1 a share, with a minimum $550 investment. The company has once again extended the investor deadline to Sept. 30, marking what is at least the eighth such delay in two years.
On top of all this, the Hightimes hits keep coming. Earlier this month, Hightimes dissolved its ongoing sponsorship of the Humboldt County festival Reggae on the River, according to Humboldt’s Times-Standard. SF Evergreen reported that Hightimes cancelled that festival in 2019 long before COVID-19 was an issue. And a lengthy Politico exposé — also from earlier this month — reported the storied stoner brand is dealing with other legal headaches.
“According to court records, the magazine’s parent company, Hightimes Holding Corp., or its subsidiaries have been named as defendants in more than a dozen lawsuits since the beginning of 2017, for breach of contract and other alleged misdeeds,” the piece reports. “Even High Times’ lawyers have sued High Times.”