This move will cross fertilize Hollister California and Arizona products, increase margins, add product diversity and provide cheap space to increase production and processing over 5 fold in measured stages, as more States are legalized.
The California market where Hollister now have just one operation is multiples larger than Arizona..
HOLLISTER BIOSCIENCES INC. ANNOUNCES 30-ACRE ARIZONA BRAND CAMPUS WITH PLANNED 700,000 SQUARE FEET OF CULTIVATION AREA AND AN EXISTING 28,500-SQUARE-FOOT PROCESSING AND MANUFACTURING FACILITY
Hollister Biosciences Inc. has completed a series of agreements designed to provide expanded revenue, capacity and margins while offering a diversity of inputs for branded products.
The transactions are intended to capitalize on the company's existing operating footprint and leading position in the rapidly growing Arizona market.
This project and associated seed-to-shelf management systems will be used to support the expansion of owned and partner brands and products, input quality, and variety.
The campus (the Hollister brand campus) includes over 700,000 square feet of canopy for cultivation and a 28,500-square-foot processing and manufacturing facility.
In addition, the company is adding a world-renowned expert to implement advanced cultivation practices and infrastructure. All figures are presented in U.S. dollars unless otherwise indicated.
Transaction details:
- A wholly owned subsidiary of the company has entered a five-year lease with three subsequent options to renew and the option to purchase the Hollister brand campus, including the surrounding approximately 30 acres of land.
- The Hollister brand campus will provide low-cost inputs for the Venom Extracts suite of products and provide ample opportunities to expand product diversity.
- The annual base rent is $420,000, with an additional $150,000 to $250,000 based on the percentage of the property's 27.5 acres of undeveloped land utilized by the company.
- Hollister will have the opportunity to purchase the Hollister brand campus throughout the duration of the lease.
- The estimated capital costs associated with phase 1 will be $3-million and will be financed with cash on hand.
- Phase 1 is planned to be completed in Q2 2022, consisting of four acres of cultivation area.
The project is designed to provide expanded capacity and margins and offer a diversity of inputs for branded products. This transformational transaction empowers the company to capitalize on its existing operating footprint and leading position in the rapidly growing Arizona market.
Hollister will use the Hollister brand campus as a hub to introduce its lineup of California-based brands to the Arizona market.
The Hollister brand campus will house cultivation, manufacturing and distribution facilities that will enable Hollister to expand capacity for Venom and white-labelling operations for future-focused and mission-aligned brands and products.
The Hollister brand campus previously served as a high-security military contractor facility and then as a hemp API (active pharmaceutical ingredient) manufacturing facility that met the U.S. Food and Drug Administration's current good manufacturing practices standard. The Hollister brand campus is zoned favourably for the cultivation and processing of cannabis and has been ISO 9001:2015 certified. Substantial utility infrastructure is already on site, including 6,000 amps of power and a solar array. The building on the Hollister brand campus includes approximately 2,500 square feet of office space and 26,000 square feet of warehousing and manufacturing space that will be customized to produce for Hollister and third party brands.
Key benefits:
- Targeted greater-than-50-per-cent reduction of raw material input costs;
- Strengthens seed-to-shelf supply chain control and minimizes limitations, disruptions and risk;
- Enhances product quality, efficiency of existing operations and diversity of inputs;
- Flexibility to expand into new product lines, form factors and market segments;
- Expand distribution of innovative third party brands in Arizona with white-label capacity;
- Enhances capacity of Venom operations and product mix;
- Provides higher cannabinoid starting materials, improving existing operational throughput;
- Reinforces mission of acquiring, developing and powering leading cannabis consumer products and the strategy of expanding margins by controlling supply chain elements;
- Enables product diversity with the focus on increasing same-store sales and distribution efficiency.
The Hollister brand campus dramatically increases the company's position in Arizona and epitomizes its continued focus on acquiring, developing and powering leading cannabis consumer products.
With the new facility, Hollister can partner with like-minded brands and aspiring entrepreneurs to support the development and distribution of their products throughout Arizona.
The outdoor undeveloped land will be developed in phases, including various low-cost cultivation methods and additional processing buildings. The company currently produces concentrates, prerolls and tinctures and is analyzing new product segments.