SCHEDULE 13D/A: Chicago Atlantic Group Deepens Control in Vireo Growth Inc. Through Major Equity and Debt Transactions

Chicago Atlantic Group and its affiliates have significantly increased their beneficial ownership in Vireo Growth Inc. to up to 36.7% through a series of debt conversions, new share issuances, and additional financing agreements, alongside a key management appointment.

Summary

• Chicago Atlantic Group and its affiliates (Reporting Persons) have substantially increased their beneficial ownership in Vireo Growth Inc.
• Chicago Atlantic GP Holdings, LLC now beneficially owns 132,627,754 shares, representing 36.7% of the class.
• On July 31, 2024, 57,181,068 Shares were acquired through the conversion of 2023 Convertible Notes.
• On July 31, 2024, Vireo Growth Inc. issued 8,991,485 Shares to CAG affiliates as consideration for entering into the Ninth Amendment to the Credit Agreement.
• On November 1, 2024, a Tenth Amendment to the Credit Agreement established a new 2024 Convertible Notes facility with a maximum principal amount of $10 million, maturing November 1, 2027, with a 12% annual cash interest rate, convertible into shares at $0.625 per share (currently 16 million shares).
• CA PIPE acquired 32,032,000 Shares in a private placement reported on December 31, 2024.
• CAOP acquired 113,267 Shares on April 30, 2024, and 84,141 Shares on May 20, 2024, both at $0.16 per Share, through private secondary purchases.
• CAOP also acquired 164,698 2021 Warrants on April 30, 2024, and 143,938 2021 Warrants on May 20, 2024, for no additional consideration.
• Open market purchases by CACO occurred between March 7, 2025, and April 4, 2025, at weighted average prices ranging from $0.3239 to $0.45 per share.
• John Mazarakis, a co-founder and partner of the CAG group, was appointed Chief Executive Officer and a director of Vireo Growth Inc. on December 18, 2024, also serving as Co-Executive Chairman of the Board.
• The percentages of ownership are based on 339,336,633 Shares outstanding as reported in the Issuer's Annual Report on Form 10-K filed March 4, 2025, assuming full exercise of 2021 and 2023 Warrants and conversion of 2024 Convertible Notes by Record Holders.
• CACO and CACC are no longer Reporting Persons as of the filing date due to their beneficial ownership falling beneath the requisite percentage.

Sentiment

Score: 5

Explanation: The filing is largely factual regarding ownership changes and financing activities. While it demonstrates continued financial support from a key investor, the ongoing reliance on debt financing and the resulting dilution for existing shareholders present a mixed picture, leading to a neutral sentiment with some underlying concerns.

Positives

• Continued financial support and investment from Chicago Atlantic Group, indicating ongoing confidence in Vireo Growth Inc.'s business operations.
• The appointment of John Mazarakis, a co-founder of the primary investor group, as CEO and Co-Executive Chairman, suggests strong alignment between management and a significant shareholder.
• The provision of new convertible note facilities (2024 Convertible Notes) offers additional capital access for the Issuer.

Negatives

• Significant dilution for existing shareholders due to the conversion of 2023 Convertible Notes (57,181,068 Shares), issuance of shares for the Ninth Amendment (8,991,485 Shares), and a private placement (32,032,000 Shares).
• The ongoing reliance on credit agreements and convertible notes from the same group of lenders (CAG affiliates) may indicate financial strain or limited access to other financing sources.
• The conversion price of $0.625 for the 2024 Convertible Notes is higher than recent open market purchase prices ($0.16 to $0.45), which could imply a premium for the debt conversion or a declining share price.

Risks

• Dilution Risk: Future conversions of the 2024 Convertible Notes and exercise of warrants by the Record Holders will lead to further dilution of existing shareholders.
• Reliance on Key Investor: The Issuer's continued reliance on Chicago Atlantic Group for financing could create dependency and limit strategic flexibility.
• Share Price Volatility: Significant share issuances and conversions can impact market supply and demand, potentially leading to share price volatility.

Future Outlook

The Reporting Persons explicitly reserve the right to formulate other plans and proposals and take other actions with respect to their investment in and loans to the Issuer, including any or all actions related to the Issuer's business, corporate structure, or management. The 2024 Convertible Notes are currently convertible into 16 million shares, indicating potential future share issuance and further changes in ownership structure.

Industry Context

This filing reflects a common financing strategy in the U.S. cannabis industry, where federal restrictions on traditional banking often necessitate reliance on private financing and debt, particularly from specialized lenders. The significant ownership stake by a lender group, coupled with a management appointment from that group, is indicative of a company seeking capital and strategic guidance from its key financial partners, a pattern often seen in growth-stage or capital-intensive sectors facing unique regulatory challenges.

Management Changes

Related Party Transactions

• The Issuer entered into a Sixth Amendment to the Credit Agreement with certain CAG affiliates.
• The Issuer entered into a Waiver and Ninth Amendment to the Credit Agreement with certain CAG affiliates, issuing 8,991,485 Shares to CAG affiliates as consideration.
• The Issuer entered into a Joinder and Tenth Amendment to the Credit Agreement with certain CAG affiliates, providing the 2024 Convertible Notes facility.
• John Mazarakis, a co-founder and partner of the CAG group, was appointed CEO and Co-Executive Chairman of the Board of the Issuer, indicating close ties between management and the significant investor.

Stakeholder Impact

• Shareholders: Significant dilution from share issuances and conversions, potentially impacting per-share value. Increased control by Chicago Atlantic Group.
• Creditors: Chicago Atlantic Group, as a lender, has strengthened its position through debt-to-equity conversions and new credit facilities.
• Management/Employees: New CEO appointed from the primary investor group, potentially leading to strategic shifts and closer alignment with the investor's objectives.

Next Steps

• Potential future conversion of 2024 Convertible Notes into 16 million Shares.
• Reporting Persons may formulate other plans and proposals regarding their investment and loans to the Issuer.
• Reporting Persons may take further actions regarding their investment, including changes to the Issuer's business, corporate structure, or management.

Key Dates

Keywords

Vireo Growth Inc., Chicago Atlantic Group, SEC filing, Schedule 13D, beneficial ownership, convertible notes, credit agreement, private placement, share issuance, dilution, corporate governance, management change, John Mazarakis, Subordinate Voting Shares, investment manager, financial reporting