SEATTLE, May 16, 2018 (GLOBE NEWSWIRE) -- CFN Media Group (“CFN Media”), the leading agency and financial media network
dedicated to the North American cannabis industry, announces publication of an article covering Crop Infrastructure Corp. (CSE:CROP) (CNSX:CROP) (CROP.CN), a company that provides land,
infrastructure, and equipment to individual operators to increase accessibility, efficiency, scalability, and sustainability. At
the same time, the company’s investors benefit from recurring revenue from long-term lease agreements and management fees from
tenant growers, making its structure similar to a real estate investment trust (REIT) in many ways.
The cannabis industry is projected to reach $50 billion by 2026, according to Cowen & Co., driven by the legalization of
adult-use and medical cannabis across a growing number of states. Despite the significant growth rates, many cultivators and
processors have struggled to raise capital to finance the variety of goods and services that they need due to federal regulations
that prevent mainstream lending institutions from participating in the sector’s growth.
Turnkey Solutions for Cannabis
Crop Infrastructure specializes in providing turnkey greenhouse projects to licensed cannabis producers and processors. These
projects consist of 12 greenhouse buildings that are each 3,640 sq. ft. With 1,350 plants per greenhouse, each project is capable
of generating over 2,000 pounds per month or approximately $2.76 million in monthly wholesale revenue. These revenues expand by
approximately 25% once factoring in the high-grade concentrates and edibles that are produced in a state-of-the-art extraction
facility on site.
Management is initially focused on the Washington State market where there are 1,284 producers and processors and 436 retailers
doing about $3.12 billion in annual sales, according to 502Data. After completing its first MEGA Greenhouse Project, the company
will be well-positioned to expand this footprint across all legal jurisdictions across the United States and Canada. The tenant
grower’s product is currently being sold in over 60 dispensaries in Washington State under various different brands.
In mid-March, the company announced that six of the 12 greenhouses are under construction at the first
Washington project. Management intends to immediately lease these greenhouses to licensed tenant growers along with brand
licensing. The company will then move on to the second phase of development for the second set of six greenhouses. Once completed
the 12 greenhouses are projected to yield over 24,000 lbs per year, which is grown using $0.02/kw hour electricity, some of the
lowest cost power in North America.
In early-May, the company also agreed to advance up to $2 million to Humboldt Holdings LLC for land and equipment
purchased and the development of a 30,000 sq. ft. greenhouse project intended for lease and brand licensing by Humboldt to licensed
cannabis tenant growers in exchange for a 30 percent interest in the company. The California-based property consists of a 10,000
sq. ft. existing cannabis greenhouse and existing building permits to expand.
Stable, Recurring Income for Investors
The cannabis industry may be rapidly growing from a top-line perspective, but it’s a difficult market for investors looking for
bottom-line profitability. Many cultivators and retailers have been forced to raise equity capital and reinvest any revenue to
expand, while those in the United States are still subject to significant political risk, particularly under the Trump
administration. Investors have few “safe” options from both an asset and risk standpoint.
Crop Infrastructure aims to fill this void by purchasing real estate, building infrastructure, and leasing it to licensed
cannabis producers and processors. In exchange, the company receives a 60 percent preferential payback via lease and management
fees on greenhouse infrastructure and related equipment until its deployed capital is returned in full. Once that happens, the
company applies an indefinite 30 percent land management fee that provides the company with an ongoing income stream.
Investors in the company’s stock benefit from stable, recurring income from lease and management fee agreements, as well as real
estate assets that provide a solid core. The company benefits from the cannabis industry’s growth, but there’s little political
risk since it’s solely involved in leasing real estate/infrastructure. By working with high-quality established tenant growers, the
company aims to reduce any ancillary risk factors and ensure stable, long-term relationships.
Looking Ahead
Crop Infrastructure Corp. (CSE:CROP) represents a compelling investment opportunity in the North American cannabis industry. By
taking a REIT-like approach, the company aims to capitalize on the growth of the cannabis industry without the uneven income and
political risks. Investors may want to consider the company as an addition to their cannabis portfolio as it completes its initial
Washington State project and sets its sights on additional North American opportunities, such as the new opportunity in
California.
For more information, visit the company’s website or download their investor presentation.
Please follow the link to read the full article: http://www.cannabisfn.com/crop-infrastructure-investment-north-american-cannabis/
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