CROP Infrastructure (CNSX:CROP) represents a compelling opportunity for investors in the North American cannabis industry, according to an article by CFN Media - the financial media network dedicated to the sector.
The firm provides land, infrastructure, and equipment to individual operators to increase, among others efficiency and scalability and its structure is similar to a real estate investment trust (REIT) in many ways.
Investors benefit from stable, recurring income from lease and management fee agreements, as well as real estate assets that provide a solid core, notes the article.
CROP provides turnkey greenhouse projects to licensed cannabis producers and processors.
The projects consist of 12 greenhouse buildings that are each 3,640 sq ft. With 1,350 plants per greenhouse, each can generate over 2,000 pounds per month or around US$2.76mln in monthly wholesale revenue.
Notably, revenues expand by around 25% once factoring in the high-grade concentrates and edibles that are produced in a state-of-the-art extraction facility on site.
Focused on Washington state..
The firm is initially focused on the Washington State market where there are 1,284 producers and processors and 436 retailers with around US$3.12bn in annual sales.
In March, CROP said that six of the 12 greenhouses are under construction at its first Washington project.
Once completed, they are projected to yield over 24,000 pounds per year, which is grown using $0.02/kw hour electricity, some of the lowest cost power in North America.
In May, the firm agreed to advance up to US$2mln to Humboldt Holdings 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% in the company.
The California-based property consists of a 10,000 sq ft existing cannabis greenhouse and existing building permits to expand.
"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," said CFN.
"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."
CROP Infrastructure shares shed 1.67% to C$0.59.