The idea is to cut costs while producing a safe, efficient and consistent experience for the customer.
By supplying expertise, seedlings and nutrients to the farm, LDS can increase production capacity while cutting production costs by extracting terpene and cannabinoid profiles from one series of genetically similar plants rather than multiple series.
“The commencement of cultivation operations in Sacramento with our isogenic cannabis strains is very encouraging to our long-term goals. The addition of over 100,000 square feet of cultivation will secure the necessary bio-mass requirements for optimum production runs of CannaStrips(TM). This operation will also secure our pricing and protect our margins going forward,” said Brad Eckenweiler, CEO of Lifestyle Delivery Systems.
LDS sells CannaStrips, a THC delivery system similar to breath-strips that increases the bioavailability of cannabis compounds. Some strips also include supplemental ingredients like vitamins and peptides.
The Sacramento farm has had two years of contaminant-free growth and has all the necessary infrastructure for the cultivation of multiple cannabis strains. It will produce 12,000 kilos of flower for CannaStrips as well as for their Highway 395 Dispensary.
“The contract cultivation on this farm will enable us to compete against black market pricing. To be competitive in the current cannabis market, companies need to produce their own biomass on a large scale,” said Casey Fenwick, president of LDS.
LDS says it plans on applying for cultivation licenses to maximize the footprint of the land.
The distribution and transportation duties will fall to the CSPA Group, another of of LDS’s subsidiaries.
Less tax means more profit
The City Council of Adelanto voted 4 to 1 to reduce the cultivation tax from $5 per month per square foot to $0.42 per month earlier this month. The dispensaries tax was also reduced from 5% down to 3%.
The City of Adelanto is following the State of California’s lead in reducing taxes on businesses to minimize the influence of the grey and black market products to make it easier for companies like LDS to operate in Adelanto.
“We understand that this was a difficult decision for the city, but without the tax reduction the cannabis industry in Adelanto would have been diminished to a couple of small manufacturers. The green zone would be abandoned and property values would have evaporated to a fraction of today’s values,” said Eckenweiler.
In other news, LDS closed a non-brokered private placement, issuing a total of 19,424,163 units at a price of 35 cents per unit, for total gross proceeds of $6,798,457.
The company will pay $233,076 in cash commissions and issue 665,931 finders’ warrants. Each warrant is exercisable for one unit at $0.50 a share for one year from the date it was issued.
Shares rose $0.01 today and are holding at $0.51.
Lifestyle Delivery Systems presently has 107,494,894 shares issued and outstanding and a market cap of $53.7 million.
Full disclosure: Lifestyle Delivery Systems is an Equity.Guru marketing client.