The California calling is strong, as Ascent Industries Corp (CSE: ASNT) announced bright news Monday that it is establishing its third location in the United States in Oakland, California.
As one of the most important cannabis markets in the world, nearly 40 million people and a sophisticated cannabis culture, the company said California presents a "compelling opportunity" for Ascent.
Last week, Ascent signed a 10-year lease for approximately 67,750 square feet of space within a building, the Oakland Tinnery, located in Oakland, California, which is owned and managed by Ascent's strategic partner, Green Sage, LLC.
"Ascent is very excited to be entering the California market, particularly in such a capital efficient way through our Green Sage relationship. The ability to expand in a key market, without diluting existing shareholders, allows us to expend our resources on our core strengths – producing high quality extracts and sophisticated branded products that resonate with consumers," said Philip Campbell, CEO of Ascent.
"This is only the first move with our partner Green Sage – we look forward to further expansion in California and other areas of North America as the right opportunities arise."
The company said Green Sage will be applying its cannabis facility construction expertise in building out the California facility to Ascent's specifications.
Green Sage will also assist Ascent in obtaining the permits and licences required for its expansion into California. Construction plans are expected to be finalized over the next 40 days.
The Tinnery is ideally located in the City of Oakland's established Green Zone, which permits cannabis cultivation and manufacturing.
Ascent said it believes Oakland is an ideal location to commence operations in California, providing the ability to scale across an entire value chain to achieve revenues quickly.
The company says it intends to create a fully integrated value chain at the California facility: producing disease and pesticide free starting material via plant tissue culture, cultivating high-quality cannabis indoors, extracting and manufacturing branded products, and distributing branded products through an on-premises dispensary and by local delivery via an e-commerce platform.
"Launching a vertically integrated cannabis operation in Oakland will not only showcase Ascent's extraction expertise, but also supply San Francisco Bay Area consumers with the high-quality indoor cannabis that will always be in demand," said James Poelzer, Ascent's chief business development officer.
Ascent management believes the opportunity available in California is currently unparalleled elsewhere in the world.
On the medical front, California has a 20-year legacy of medical cannabis sales and is estimated to have over one million cannabis patients in addition to the millions of adult-use customers.
Estimates on the value of this market vary, but BDS Analytics and Arcview Group indicated in The State of Legal Cannabis Markets – 6th Edition, published in June 2018, that California could be a US$5.1 billion market in 2019.
"We are excited to be working with our partner Ascent in Oakland, and very pleased that they have taken what was the last available space in the Tinnery," said Ken Greer, managing director of Green Sage.
"We believe that Ascent's sophisticated brands will find a ready market in California, starting in the San Francisco Bay Area. We look forward to continuing to grow with Ascent, both in California and throughout North America."
Shares of Ascent Industries were down at C$0.58 on Monday.