GB Sciences Inc (GBLX)

[Supermeatball]

Feb. 15--GB Sciences, the Las Vegas-based company handling medical marijuana operations for the LSU AgCenter, has leased a former Pepsi distribution site near Highland Roadand Interstate 10 in Baton Rouge.

GB Sciences LLS, the entity set up to operate the local medical marijuana business, signed the lease for the 5.40-acre site at 18350 Petroleum Drive in August, according to a quarterly filingGB Sciences made Wednesday with theU.S. Securities and Exchange Commission. Along with the land, the property has a 36,125-foot-square building on the site.

Under the terms of the lease, GB Sciences is spending $25,588 a month on rent through June 2022. If the company decides to extend the terms of the lease, it will bump up to $28,147in August 2022. If a second lease option is extended, the rent will rise to $30,966in August 2027.

Under GB Sciences' five-year licensing contract, the LSU AgCenter will receive a minimum financial contribution of$3.4 million, or 10 percent of gross receipts. GB Sciences will pay at least$1 million for the first year of the contract and $600,000 for the remaining years. The company will also make an annual research investment of$500,000 to the AgCenter. The company finalized its agreement with the AgCenter in September.

Construction of the production facility should be finished by March and medical marijuana should be available by late summer, AgCenter officials said.

LSU AgCenter officials asked that the location of the medical marijuana facility be kept confidential because of safety and vandalism concerns, said Bill Settoon Jr., vice president and general manager for GB Sciences Louisiana. But the address was revealed in theSEC filing.

Two off-duty East Baton Rouge Sheriff'sdeputies will be on the scene while operations are ongoing at the facility, he said.

Plans are to have "less than 20 people" working at the facility, Settoon said. LSU also will build out 5,000 square feet of lab space for AgCenter employees.

"This is a surprisingly high-tech operation," he said. "The marijuana will be grown in clean rooms, like where they make computer chips or perform surgery."

That level of care is needed because they are producing medicine at the site.

"We need to maintain the genetic consistency of the plants," he said. "If we are selling a product for a mother to give to a sick child, we need to make darn sure what we produce next month is like what we produced this month."

Between $5 million to $7 million will be spent on the building. That includes installing a modular clean room that is now being manufactured in Austin, Texas.

GB Sciences announced on Wednesday it sold a 15 percent stake in GB Sciences Louisiana to newly formedLafayette-based Wellcana Group LLCfor $3 million. GB Sciences said the new funds will be used to complete the construction of the Louisianainfrastructure for medical marijuana, and for general corporate purposes. The influx of cash also will enable GB Sciences to redirect financial resources already earmarked for the Louisianaproject to other areas of its operation and in other jurisdictions.

According to information on theLouisiana Secretary of State's website, Wellcana was formed in Lafayette last month. Its registered agent is Lafayetteattorney Charles Rush and the officer isK2 Logic LLC, which has an address the same as Rush's law office. K2 Logic's officers are Rush and Charlie Hohorst III, a Lafayette businessman who founded CajunGrocer.com, an online retailer for Louisiana food and specialty items. Rush and Hohorst did not respond to requests for comment.

GB Sciences posted a $7 million loss, or5 cents per share in the quarter that ended on Dec. 31, 2017. That compares with a $3.5 million loss, or 4 cents per share, in the quarter that ended on Dec. 31, 2016.




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