ITEM 3.5 Vireo Health of Minnesota0tSCITY eF O
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORGINATING DEPARTMENT:
REQUESTOR:
MEETING DATE:
Legal
Andy MacArthur, City Attorney
December 12, 2016
PRESENTER(s):
REVIEWED BY:
ITEM #:
Consent Agenda
Interim City Administrator
3.5
AGENDA ITEM DETAILS
IMM
RECOMMENDATION:
Staff recommends that the attached Agreement be approved between the City of Otsego and Vireo
Health of Minnesota, LLC formerly known as Minnesota Medical Solutions, LLC regarding community
support obligations and adoption of Resolution No. 2016-106 accepting the initial $20,000.00
contribution.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
Yes
No.
BACKGROUND/JUSTIFICATION:
Vireo Health of Minnesota, then known as Minnesota Medical Solutions, LLC applied for licensure as one
of two companies allowed to grow and process cannabis for medical purposes in 2014. At that time,
Vireo requested City support for their application stating that they would pay to the City $20,000.00 for
public community support use for the initial two year period of operation and subsequently 2% of their
net profit yearly thereafter. Vireo was chosen as one of the two initial licensees by the Minnesota
Department of Health in late 2014. Vireo commenced revenue generation operations within the City on
or about August 1, 2015.
Vireo desires to make the $20,000 contribution at this time. In the event that they make net profit that
would account for more than that amount by the end of the initial two year period (August 1, 2017).
They will pay any additional amount owed above and beyond the $20,000. Going forward, they will pay
2% of net profits to the City on an annual basis.
Vireo represents that they made no profit during the first year.
Also attached is a resolution accepting the funds.
SUPPORTING DOCUMENTS: xo ATTACHED ❑ NONE
• Agreement between Minn Med and the City.
• Resolution No. 2016-106 accepting funds.
MOTION: (Please word motion as you would like it to appear in the minutes.)
Motion to approve Agreement Between the City of Otsego and Vireo Health of Minnesota FKA
Minnesota Medical Solutions, LLC Regarding Community Support Obligations and Resolution No. 2016-
106 Accepting Community Support Obligation Funds.
BUDGET INFORMATION
FUNDING: BUDGETED: ❑ YES
NA o No
AGREEMENT BETWEEN THE CITY OF OTSEGO AND VIREO HEALTH OF MINNESOTA, LLC FKA
MINNESOTA MEDICAL SOLUTIONS, LLC REGARDING COMMUNITY SUPPORT OBLIGATIONS
THIS AGREEMENT entered into this _ day of December, 2016 ("Effective Date") by and between the
City of Otsego ("CITY"), a Minnesota Municipal Corporation and Vireo Health of Minnesota, LLC FKA
Minnesota Medical Solutions, LLC (hereinafter "MINN MED") a Minnesota Limited Liability Company.
WHEREAS, MINN MED sought and received support from the CITY in its effort to obtain licensure from
the State of Minnesota as a Cannabis grower and distributor for medical purposes; and
WHEREAS, MINN MED did receive a license from the State of Minnesota to operate; and
WHEREAS, MINN MED has located and constructed facilities within the CITY and is presently operating
by growing and processing cannabis: and
WHEREAS, MINN MED represented that in connection with the licensure support provided by the CITY,
MINN MED would contribute $20,000.00 to the CITY during its first two years of revenue generating
operations and 2% of its net profit thereafter (these payments hereinafter referred to as "Community
Support Payments"). In addition, MINN MED represented that to the extent that it generated net profits
in its first two years of operations and 2% of such net profits equaled a sum greater than $20,000, MINN
MED would make a payment promptly after the end of such two years equal to 2% of MINN MED's net
profits realized during such two years, less $20,000, to the extent that MINN MED had already made the
$20,000 payment to the CITY; and
WHEREAS, MINN MED commenced licensed revenue generating operations on or about August 1, 2015
("Operational Start Date") and the two year period following the Operational Start Date shall be referred
to as the "initial Period" and each year following the Initial Period that MINN MED is growing and
processing cannabis at its current Otsego facility shall be referred to as a "Subsequent Period"); and
WHEREAS, MINN MED, indicated that it would enter into an enforceable Agreement with CITY regarding
its obligation to make Community Support Payments.
NOW, THEREFORE the Parties Agree as follows:
1. MINN MED shall pay to CITY $20,000.00 to satisfy its Community Support Payments obligations
for the Initial Period.
2. The payment identified in Section 1 shall be made on or before December 31, 2016. In the event
that MINN MED does make a net profit for the Initial Period and 2% of such net profit during the
Initial Period is in excess of $20,000, then on or before October 1, 2017, MINN MED shall make a
payment to the CITY equal to 2% of its Initial Period net profits less the $20,000 payment MINN
MED is making to the CITY in December 2016.
3. Within 30 days following the Initial Period, MINN MED will provide to CITY financial documents
satisfactory to the CITY identifying its net profit from the Initial Period... Within 30 days
following each Subsequent Period, MINN MED will also provide to CITY financial documents
satisfactory to the CITY identifying its net profit from each applicable Subsequent Period.
4. To the extent that MINN IVIED realizes a net profit in any Subsequent Year, MINN IVIED shall
make payment to the CITY equal to 2% of such net profit within sixty (60) days following the
completion of the applicable Subsequent Period.
5. This Agreement shall be subject to and enforced under the laws of the State of Minnesota.
6. In the event that any provision of this Agreement is found to be invalid by a court of competent
jurisdiction the Agreement shall be construed to be as close as possible to the original intent of
the Agreement without the invalid provision.
7. This Agreement is the final agreement of the parties related to the subject matter identified
herein and supersedes any previous agreement either written or oral.
VIREO HEALTH OF MINNESOTA, LLC
FKA MINNESOTA MEDICAL SOLUTIONS, LLC
In
Its
CITY OF OTSEGO
Jessica Stockamp, Mayor
Tami Loff, City Clerk
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO.2016-106
RESOLUTION ACCEPTING COMMUNITY SUPPORT OBLIGATION
PAYMENT CONTRIBUTION FROM VIREO HEALTH OF MINNESOTA,
LLC FKA MINNESOTA MEDICAL SOLUTIONS, LLC
WHEREAS, the City of Otsego (CITY) supported the application of Vireo Health
of Minnesota, LLC FKA Minnesota Medical Solutions, LLC (hereinafter MINN
MED) seeking license from the Minnesota Department of Health for growing and
processing cannabis; and
WHEREAS, MINN MED represented to the CITY that if granted the license it
would provide Community Support Payments to CITY in at least the amount of
$20,000.00 for the first two years of operation and/or 2% of its net profits for that
period, whichever is greater, as well as an ongoing obligation after the initial
period to make an annual yearly payment of 2% of its net profit thereafter; and
WHEREAS, MINN MED has determined that it will make the $20,000.00
contribution at this time, subject to review of net profits for the second year of
operation which could result in the obligation to make a further contribution.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of
Otsego, Wright County, Minnesota as follows;
1. The CITY hereby accepts the $20,000 dollar Community Support
Obligation payment, subject to possible additional payments upon review
of net profits in the initial term.
ADOPTED this 12th day of December, 2016 by the Otsego City Council.
MOTION TO ADOPT the Resolution by Council Member
and seconded by Council Member
IN FAVOR:
OPPOSED:
CITY OF OTSEGO
Jessica Stockamp, Mayor
Tami Loff, City Clerk
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