# Master due diligence memo

## Executive summary

The public record supports a high-priority diligence program around seven exposure categories:

1. **ASC 810 / de facto control challenge.** Glass House Brands filed public transaction documents showing Glass House Retail, LLC was separated for U.S. GAAP deconsolidation purposes, while Glass House retained 900 exchangeable units and extensive protection rights. The issue is whether Glass House truly lost control or retained power/economics sufficient to require consolidation.
2. **DCC/local ownership-control approval gap.** SEC transaction documents reference DCC and local cannabis regulatory approvals as closing conditions, but the approval records themselves are not publicly attached.
3. **Federal raid/labor investigation exposure.** Glass House publicly disclosed July 10, 2025 federal raids at two farms, immigration-warrant scope, reported mass detentions/arrests, reported minors, a contractor worker death, and remedial measures.
4. **DCC Citation and Fine.** DCC publicly lists a Citation and Fine for Glass House Camarillo Cultivation LLC, license CCL21-0005116, effective May 15, 2026. The fine amount and factual basis are not public on the listing page.
5. **Related-party governance.** Public filings disclose relationships and payments involving Beach Front Property Management, Jon A. Neu Insurance, 5042 Real Estate Investment, 3645 Long Beach LLC, Kazan Trust, and preferred equity held by insiders.
6. **Schedule III/adult-use boundary.** Glass House's NYSE thesis depends on separating medical/Schedule III from adult-use/non-medical cannabis exposure.
7. **Missing CSA/notes/side letters.** Unfiled documents may materially affect control, economics, and disclosure analysis.

## Public-record findings

### Deconsolidation document package

The June 17, 2026 SEC Form 6-K exhibit index lists the core public documents: Material Change Report, Second Amended and Restated LLC Agreement, Class A Unit Purchase Agreement, Protection Agreement, Unaudited Pro Forma Financial Statements, and news release. The LLC Agreement states the deconsolidation transaction separates Glass House Retail from Glass House's consolidated financial statements for U.S. GAAP purposes; the Unit Purchase Agreement and Protection Agreement define the economics and control architecture.

### DCC Citation and Fine

DCC's public compliance page lists a Citation and Fine for Glass House Camarillo Cultivation LLC, license CCL21-0005116, cultivation annual license, effective May 15, 2026. The entry identifies 4 CCR §17800, 4 CCR §15042, and BPC §26160 in the retrieved page. DCC also states its compliance-action table includes denials, citations, fines, suspensions, and revocations, and that APA Orders of Decision have not been issued for these table matters unless otherwise provided on final-decision pages.

### Federal raid/labor exposure

Glass House's August 4, 2025 release states federal officers led by ICE/DHS raided two farms on July 10, 2025, under a warrant for evidence of possible Title 8 immigration violations; approximately 360 people were reported detained/arrested; nine Glass House employees were detained/arrested; approximately eleven minors were reportedly detained; one third-party contractor employee died from injuries sustained during the raid; and Glass House terminated two farm labor contractors, implemented E-Verify/document review and age-gating controls, hired Guidepost Services, and signed a labor peace agreement.

### NYSE and Schedule III

Glass House announced on June 25, 2026 that its subordinate voting shares were approved for NYSE listing and expected to trade as GLAS beginning June 30, 2026. The company connected the listing to the reclassification of medical cannabis to Schedule III. DEA materials show medical marijuana Schedule III actions and broader marijuana rescheduling proceedings are distinct regulatory actions.

### Hemp/export add-on

On July 7, 2026, Glass House announced its first international sale of smokeable CBD biomass to Europe from Greenhouse 4 at the Camarillo Farm. This creates a new diligence lane around hemp registration, THC-threshold testing, export documentation, customs, buyer/import permits, EU member-state rules, product claims, and segregation from cannabis operations.

## Highest-value next actions

1. File DCC PRA for CCL21-0005116 citation/fine packet.
2. File DCC PRA for Glass House Retail / NSJB ownership-control approval and FIH records.
3. File local PRA requests to each retail-license jurisdiction.
4. Send company/auditor ASC 810 request for technical memo, CSA/MSA, Purchase Note, Repurchase/Put Note, side-letter certification, board/audit committee materials, and auditor sign-off.
5. File ICE/HSI, CBP, DOL/WHD, and Cal/OSHA/DIR records requests.
6. Build entity/beneficial-owner map using CA SOS, county recorder/assessor, UCC, SEC/SEDAR/SEDI, ADV, 13F/13D/13G, and DCC owner/FIH records.