A third-party credit lender has taken control of High Times assets that include several California dispensaries, two brand name trademarks, a cannabis product manufacturing and distribution center, a cannabis cultivation property with a 300-light grow, and the web domain 420.com.
The action took place in April, shortly after the company shuttered several California dispensaries without notice, leaving employees unpaid and several licenses poised to expire or be surrendered. CIBC Bank sued to have a receiver appointed, and now assets valued at around $11 million are being sold through auctioneer Green Life Business Group.
High Times lender, ExWorks, also in receivership
During High Times’ growth days, the company borrowed up to $28.8 million from a Chicago-based private lender called ExWorks. ExWorks was run by Randolph Abrahams and sold hard money secured loans to small businesses that couldn’t get traditional bank loans.
ExWorks’ lending platform was in return funded by a banking syndicate led by CIBC Bank which, according to court documents, issued ExWorks a secured revolving credit facility, which totaled $150 million outstanding as of September 2019. The syndicate split the funding of the credit facility as follows:
- CIBC Bank USA $67.5 million
- Chemical Bank, a division of TCF National Bank: $25 million
- Bank United $25 million
- First Bank of Highland Park $25 million
- Inland Bank $7.5 million
The credit facility’s covenants included required annual audits and a default trigger for any change of control. By May 2021, ExWorks had failed to pay interest or the principal balance due, failed to supply audited financials, and had removed the company’s founder. As a result, CIBC Bank declared its loan in default and filed a lawsuit in Cook County Court, Illinois, where a receiver named Steven Kunkel was assigned.
Kunkel was tasked with collecting on ExWork’s $400 million in outstanding loans; this included the secured loan to High Times. In October 2022, Hightimes Holding Corp., the holding company for High Times’ assets, which had been attempting to raise $13 million in an alternative Reg A public offering, announced it had defaulted on some of its ExWorks loans. The senior loan interest was payable monthly at the rate of 15% per annum, with principal installments of $100,000 per month payable. High Times later negotiated a forbearance agreement with ExWorks and even agreed to a settlement of $14 million plus accrued interest, which was never paid.
The constraints of state receivership limited the amount of control Kunkel could exert over how High Times’ founder and chairman, Adam Levin, would dispose of the company’s assets or spend its cash. After the news of the California store closings, the receiver hired another receiver specifically for the High Times assets, Kevin Singer. Singer then chose Green Life on April 30 to estimate the value of the High Times assets, set prices and take bids for the assets.
A source close to the situation said because High Times was returning profit-generating dispensaries and a cultivation license to the state, the CIBC Bank attorneys and the ExWorks receiver were able to show the court they needed more control before High Times’ management damaged the remaining valuable assets. On April 4, ExWorks’ receiver had tried to get a California state court judge to issue a restraining order prohibiting any further closings or license surrenders, according to a source familiar with the legal proceedings.
High Times’ Levin was charged by the SEC in 2023 for not disclosing he had paid a promoter to tout High Times’ Reg A offering and was ordered to pay around $600,000. He was also barred from being a director of a public company. HighTimes Holding Co. raised more than $20 million from thousands of small investors via its Reg A offering during the course of the stock promotion, according to the SEC.
According to an April 18 receivers report on ExWorks reviewed by CRB Monitor, Kunkel expects to get $100,000 from the now-defunct High Times by the end of May.
Value of High Times assets estimated at $11M
CRB Monitor previously reported High Times had closed its San Bernardino and Coalinga stores, and some of the staff had taken cannabis products after they learned they would not be getting paid. In the aftermath of the reporting on the chaotic closings in San Bernardino and Coalinga, the receiver was able to seize control of the Blythe store and prevent its closing. However, each store owes back taxes, payroll, rents to landlords and construction bills. Green Life chief Drew Mathews told CRB Monitor the dispensaries in receivership will be wiped free of all debts High Times incurred, including back taxes.
The Redding store was High Times’ most profitable store, according to financials listed on Green Life’s website. A year ago, it was generating around $600,000 monthly – now it’s less than half of that. Other locations being sold include Lake Shasta, Coalinga, Blythe and San Bernardino. Then there is the intellectual property under the Moxie brand and a distribution center in Lynwood, Calif. The bulk of the dispensaries being sold were opened by the Have A Heart company of Washington state. High Times bought the stores in 2020 in what is now considered an highly overvalued deal.
Mathews said the currently offline internet domain 420.com received a bid within 24 hours of listing, but he considers it too low. Likewise, the High Times dispensaries have received a bid for $1 million, but again he believes a higher value can be obtained. The ExWorks receiver is hoping the receiver auction can bring in 50 cents on the dollar on debt claims. Mathews told CRB Monitor he thinks the total potential value of the assets is $11 million, with the High Times brands alone valued at $7 million.
Green Life has a cutoff date to accept bids on the assets of May 17. Everything will then go up on its website for a one-day auction. Bidders who bid now will be the stalking horse bid but can be outbid at the auction. Mathews said only qualified bidders with verified financial funds will be allowed to bid, although seller financing will be offered.
CIBC Bank is represented by Terance Banich of Katten Muchin Rosenman LLP. Adam Levin of High Times and attorney Banich did not return an email for comment.
