CROP Infrastructure Corp (CSE:CROP) (OTCMKTS:CRXPF) announced Friday that its tenant Hempire has taken a 25% stake in a licensed California cannabis distribution and manufacturing company to gain access to its extraction capabilities.
Hempire’s stake comes in exchange for the CROP tenant buying additional extraction equipment for the undisclosed company.
As is the case with all CROP tenant licencees, Humboldt Holdings, the company invested in by CROP, will keep the right to acquire the stake in the undisclosed company should US federal laws change to support the use of cannabis and tetrahydrocannabinol (THC), the psychoactive component of cannabis.
The new partnership will allow Hempire, a key cannabis brand for CROP, to access equipment to process cannabis flower, cannabis trim and biomass into distillate oil containing THC. The manufacturer will, in turn, carry the cost of processing the cannabis and receive 40% of the oil sales while CROP and its tenant get the remaining 60%.
As well as processing Hempire’s material, the facility will also be used to work through cannabis from other companies to be sold under CROP brands.
As much as 50 liters of THC oil is being extracted to fill CROP’s vape cartridges under the Hempire, Evolution Cannabis and Tiff CBD brands.
The new facility will also handle Hempire’s packaging and distribution for all California operations, thus offering the chance for sales at hundreds of dispensaries.
“This further vertically integrates CROP’s tenant Hempire in preparation for continued sales in the California market, this will streamline the manufacturing, packaging and distribution of the brands … and thus profitability and logistics of production for the California farms,” said CROP CEO Michael Yorke in a statement.
Last year, CROP made inroads into California by entering into what's called a membership purchase agreement with Humboldt Holdings LLC, where (CROP) agreed to advance up to US$2mln to Humboldt for land and equipment purchased and the development of a 30,000 sq ft greenhouse project in return for a 30% interest in Humboldt.
Humboldt, in turn, leased its property/infrastructure and licensed its branding to tenants, including The Hempire Company LLC of California.
CROP’s projects include cultivation properties in California, two in Washington State, a 1,000-acre Nevada cannabis farm and a portfolio of equity in listings within the cannabis space.
CROP shares slipped C$0.01 to hit C$0.33 in Canadian trade on Friday afternoon.
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