Cherubim Interests, Inc. (CHIT) Poised to Capture Rapidly Gr Cherubim Interests, Inc. (CHIT) Poised to Capture Rapidly Growing Marijuana Sector’s Heavy Demand for Indoor Grow Space, Technologies
Colorado has been a canary in the coal mine for signaling developing trends in the cannabis industry since the state approved recreational consumption back in 2012. The latest trend to crop up on investor’s radar, a shortage of indoor space to grow the more than 19 tons of pot sold last year, was recently highlighted by the Wall Street Journal in an article that breaks down how the state is seeing a commercial real-estate crunch due to the rapid proliferation of indoor grow operations and distribution facilities. According to brokerage firm Cresa Partners, such operators collectively took up one third of all leased warehouse space over the last 18 months in Colorado, as the number of active grow licenses for retail consumption has nearly doubled, coming in at just under 400.
With $700 million in sales for medical and recreational combined last year, and a new monthly record of some $50.1 million in June for recreational sales alone, Colorado’s thriving cannabis market shows no signs of slowing down, adding further fuel to the fire of tightening supply in warehouse space that is available for lease. Moreover, this same trend could go viral in coming years as more and more states move to pass similar laws, with state legislatures spurred on by juicy tax revenue figures. In Colorado, school-bound tax revenues from the marijuana industry hit $16.6 million for the first six months of 2015, a 24.8 percent increase over the amount earmarked for schools that was taken in during all of last year.
Little surprise then that states like Oregon have rapidly moved to pass similar decriminalization, with a law recently signed by the Governor allowing dispensaries that are already selling medical marijuana to begin dispensing recreational as well, a full three months ahead of the initially scheduled date. With retail projections of around $200 million for its first year and an accompanying tax take in the neighborhood of $20 million, according to Arcview Market Research, Oregon could quickly see the same kind of scramble for indoor grow space that Colorado is now experiencing. Also, with eleven more states currently on the road to passing recreational legalization, such as California and Nevada, the demand for indoor grow space and the requisite cultivation technologies that go along with it, spell a bright future for companies such as Cherubim Interests, Inc. (OTC: CHIT).
Cherubim Interests has acquired an exclusive worldwide license to portable and scalable controlled environment agriculture technology, and the company is now leveraging its capacity as an alternative construction and real estate development company to build and deploy facilities for the booming medical and recreational cannabis market. Leaning heavily on wholly-owned subsidiary BudCube Cultivation Systems USA, Cherubim Interests will seek to gain an increasingly dominant hand in the cultivation game, as the same trend that has been firmly established in Colorado goes nationwide, amid the continued rush by states to pass legalization measures in pursuit of hefty tax revenues.
With lease rates currently around $17 per square foot in Denver, or roughly four times the average rate for industrial space elsewhere in the country, and no signs of Colorado’s marijuana industry slowing down, this is a shrewd play for development-stage Cherubim. The low hanging fruit of the cannabis sector is only the beginning for CHIT as well, given that its model for controlled environment cultivation is perfect for addressing other agricultural demands, such as the growing desire among consumers in established markets for organic produce, and increasing food shortages worldwide, driven by mounting environmental factors that have led to extreme drought conditions in numerous regions.
BudCube Cultivation Systems USA offers an extremely lightweight and flexible grow model for rapidly implementing cultivation anywhere in the country where cannabis cultivation is made legal. The immediate advantages of such a scalable, modular, and completely portable solution to commercial operators on the supply end of the marijuana business are unmistakable. The total cost of implementing such a solution is highly preferable to established construction and cultivation methodologies, and the speed at which such an approach can be implemented will continue to be seen as a key advantage for operators looking to seize first-mover advantage as new markets open up in other states.
Of course, controlled environment agriculture is just one focus area for CHIT, as the company is also pursuing alternative construction and broader real estate development goals via its recently announced hybrid business model. In addition to plant cultivation facilities, the company will pursue acquisition/development of single, multi-family and commercial rental properties.
By leasing secured square footage in the controlled environment agriculture space, on both the micro (traditional multi-tenant) and macro (single tenant) scale to individuals or corporations in need, via an approach that is similar to mini-storage companies, Cherubim Interests aims to get significant mileage out of combining its proprietary grow tech with real estate development and property management oversight.
For more information, visit www.cherubiminterests.com or www.budcube.com
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