CROP Infrastructure (CROP.C) has released a deluge of good news for investors in recent weeks, including harvest updates, newly secured properties and two developments in the company’s Italian endeavors.
The company continues to keep itself in the news with these updates, boosting its profile as an attractive investment as industry giant Canopy Growth Corp (WEED.T) searches for a place to park $5 billion in cash.
CROP Infrastructure announced on Tuesday that one of its two Washington State properties received an updated building permit, greenlighting continued build-outs.
Known as “The Dozen,” CROP Infrastructure’s project includes six purpose-built proprietary greenhouses which are 90 percent complete.
Additional upgrades to the property include upgraded access roads and new staff facilities. Once finished, the project will be ready for site approval.
Phase one of the facility’s construction centered on laying the foundations for 12 indoor agricultural canopies. The first phase of development has delivered a total of 44,000 square feet of grow-space.
Keeping in line with CROP Infrastructure’s business model, the newly constructed grow-spaces will be leased to licensed tenant growers.
Tenants will also be leased brand licensing for CROP Infrastructure’s products and the company’s CROP SAFE Standard Operating Procedures (SOPs).
Each of the 12 completed indoor growing spaces will be charged USD$0.02/kWh for electricity.
Commercial operations in Washington State were charged an average rate of USD$0.09/kWh in May, according to chooseenergy.com.
CROP Infrastructure’s consulting partner has calculated that this could result in production costs of USD$150 per pound even while following CROP SAFE SOPs.
On September 7, CROP Infrastructure announced it had completed its membership interest purchase of Nevada-based Elite Ventures, acquiring 49 percent member interest in the company’s Nye County agricultural property.
Located in central Nevada, the property and surrounding areas benefit from a temperate climate which is well suited for both greenhouse and outdoor cannabis cultivation.
The company reports having planted 240 acres of CBD hemp on the property which currently stand between two-and-a-half to three feet tall. All 240 acres of hemp are growing under pivot and the company plans to harvest within the next 45 days.
A recent plant count suggests 3,000 healthy plants per acre or 720,000 plants under pivot. All harvesting equipment has been secured for the resulting hemp biomass. The cost of production was not expected to exceed $700,000, with $350,000 incurred to date, and no more then $200,000 in additional costs expected to prepare our tenant for this harvest.
CROP Infrastructure CEO and Director, Michael Yorke said the company was pleased to see the operation’s first harvest “coming in under budget.”
On September 6, CROP Infrastructure announced that its application to establish its San Bernardino dispensary has reached stage three of the four-stage process.
The selection process for potential dispensaries in California consists of the following four stages:
- Preliminary determination of eligibility. $3,258.00
- Initial ranking. $701.00
- Second ranking. $1,790.00
- Public Meeting and City Council Final Selection. $1,937.00
The company’s second piece of news on the 6th concerned its Emerald Triangle growing facility in Humboldt. Dubbed “Hempire,” the facility spans 30,000 square feet on an 8.46 acre property, including a 10,000 square foot medical cannabis greenhouse and 20,000 square feet of recreational cannabis grow-space.
Hempire is currently in the harvest stage of production, while enough cannabis to fill two greenhouses is currently drying and awaiting analysis before being brought to market.
Crop’s tenant, Hempire’s harvest looks phenomenal and we look forward to receiving the first brand licencing and lease payments from Hempire in September. The Emerald Heights dispensary application is exciting as vertically integrating tenants will provide for the largest returns both from a brand licencing perspective and return on investment from CROP’s real estate portfolio.
–Michael Yorke, CROP Infrastructure director & CEO
The company has also provided double-barreled news on its ventures across the pond, discussing the release of its hemp-oil-infused cosmetic line while its JV partner aims to establish dispensaries in Northern Italy.
In late August, CROP Infrastructure and its Italian JV partner, Xhemplar S.R.L., said they aim to open two CBD retail outlets in Italy. Both companies co-operate a cannabis cultivation and extraction facility there.
The cosmetic and therapeutic products are to be released under the URBAN JUVE brand, created by Urban Juve Provisions, itself a subsidiary of The Yield Growth.
CROP Infrastructure acquired exclusive Italian and non-exclusive US distribution rights for products created by The Yield Growth in June such as the product line created by the company’s subsidiary.
Products from both Xhemplar S.R.L. and Urban Juve Provisions will be sold at all of CROP Infrastructure’s prospective Italian dispensaries.
These European retail-spaces are slated to open by year’s end, serving as the company’s beachheads for establishing themselves in the European markets.
The fastest cannabis market growth is expected to come from outside North America, especially Europe where the main growth driver will be medical applications. Medical cannabis use will be fed by $1.3 trillion estimated annual government-subsidized healthcare spending. The structure of the healthcare industry is expected to make Europe the number one medical cannabis market in the world.
Targeting the wellness-conscious consumer, Urban Juve Provisions offers cannabis-infused products which can be easily incorporated into one’s skin-care routine.
The company has created over 55 cosmetic and therapeutic products containing sativa hemp oil, 11 US provisional patents and is currently developing a product-line for men.
Additionally, the company claims to have secured nearly $5 million in signed licensing deals, with supplementary revenue being provided by its partner Loop Insights, a website which covers market news.
CROP Infrastructure maintains the right to add hemp oil to products distributed under the URBAN JUVE brand, such as the company’s upcoming line of topical products slated for release this fall.
CROP Corp’s recent tear
CROP Infrastructure’s recent news releases have been more of a barrage than a blast. The company has consistently released updates on its projects, acquisitions and new product lines in recent months.
As stated by Equity Guru’s Chris Parry, Canopy Growth has $5b of investment capital burning a hole in its pocket, and CROP Infrastructure is making a strong case for itself as a viable acquisition.
- Jamaica: Applicant, 4 acres, 12k sq. ft. extraction facility
- California: Applicant, West Hollywood and San Bernadino dispensary locations with one partner, 10k sq. ft. grow with another
- Washington: 35k sq. ft. of canopy growing with one partner, 44k sq. ft. with 114k sq. ft. expansion planned with another partner
- Nevada: Applicant, 315 acres production ready, ready to seed
- Italy: 435k sq. ft. of outdoor grow, 87k indoor under construction
To recap, CROP Infrastructure’s business model is more aligned with a real estate investment trust than a traditional LP.
Facilities and subsequent build-outs can be expensive, as any hopeful grower knows. To facilitate the development of cannabis cultivation operations, the company finances growers’ operations in return for a portion of their future earnings.
The company has an accumulated deficit of over $5 million as of May 2018, but the nature of its business model means revenue has always been dependent on investments getting off the ground.
That said, progress is apparent and the company is continuing expansion. Whether or not it becomes profitable is another question altogether.
Full Disclosure: Crop is an Equity Guru marketing client and we own stock.Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.