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CROP Infrastructure forges path to prosperity in cannabis

Snapshot

After much deliberation, CROP recently scrapped plans to sell itself to MYM Nutraceuticals Inc, but it remains in talks with MYM as well as other companies about some of its assets

Crop Infrastructure Corp. -

Quick facts: Crop Infrastructure Corp.

Price: 0.01 CAD

CSE:CROP
Market: CSE
Market Cap: $1.71 m
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  • Provides financing solutions and offers capital investment for land expansion, greenhouse facilities as well as brand positioning opportunities
  • CROP bridges gap in an environment where traditional financing is limited
  • Portfolio of assets includes Canna Drink, a cannabis-infused functional beverage line, and 16 cannabis brands

What CROP Infrastructure does:

CROP Infrastructure Corp (CSE:CROP) (OTCMKTS:CRXPF) is focused on real estate assets and cannabis branding.

The company name spells it out in a clear way: CROP is an acronym for Cannabis Real Estate Opportunity Portfolio, and it offers turnkey services by building, leasing and managing international cannabis and hemp infrastructure.

After much deliberation, CROP recently scrapped plans to sell itself to a rival cannabis company MYM Nutraceuticals Inc (CNSX:MYM). While a formal deal is currently off the table, CROP is still engaged in discussions with MYM as well as other companies about transactions that focus on specific assets of the company.

A significant focus of CROP is constructing, owning and leasing greenhouse projects. The company provides financing for land expansion, brand positioning opportunities, specialized equipment and access to approved nutrients for licensed cannabis producers in legal growing regions.

In layman’s terms, CROP is structured in a similar way to a Real Estate Investment Trust (REIT), basically a company that owns, operates or finances income-producing real estate. CROP leases real estate and provides equipment/expertise in exchange for a management fee.

Safe to say, these are not your average greenhouses. A competitive edge is a competitive edge and the modern greenhouse canopies offer a high-quality production environment - at the lowest potential cost to growers. CROP's portfolio of projects includes cultivation properties in California, two in Washington, a 1,000-acre Nevada cannabis farm, 2,115 acres of hemp CBD farms, and a portfolio of common share equity in upcoming listings within the cannabis space.

But that's not all. CROP has also developed a portfolio of assets that includes Canna Drink, a cannabis-infused functional beverage line, and 16 cannabis brands.

How is it doing:

CROP has had a busy 2019. 

In California, CROP continued to bolster its Humboldt County farm in California, and received 1,000 four-foot tall cannabis plants. Humbolt farm has a total of 10,000 square feet of indoor cultivation spread throughout five greenhouses, and an additional 20,000 square feet of outdoor grow acreage.

The company hit a marker in August, with the completion of its first harvest of 2019 in California.

CROP has also been busy in Oklahoma with a number of projects. CROP's tenant in Oklahoma, Hempire, has been issued with medical cannabis cultivation and processing licenses. CROP also has a 20-acre property that has been cleared and prepped with high nutrient soil to prepare for tenant planting of medical cannabis in Oklahoma. The land is expected to yield 30,000 pounds of dried flower annually.

The company also announced that it has completed the construction of its 57,600 square foot nursery in Nye County, Nevada and it is ready to support the company’s CBD farm operations.

And in another signal of its intentions, last June, CROP said its partly-owned subsidiary DVG LLC acquired additional space for an outdoor cannabis farm in Grant County, Washington, which is already operated by a Tier 3 licensed tenant and was fully planted for the 2019 season.

CROP's tenant brands, Hempire and Evolution, are now available in 40 retail locations.

The flower is available in eight different strains across seven sizes, with five concentrates across 20 separate strains giving retailers a combination of over 100 stock keeping units (SKU) to offer customers. The retail storefronts are populated primarily along the coastal cities of Washington. 

"Our tenant growing team and their sales team have made outstanding progress with product placement in 40 retail locations for both flower, oils and extracts,” said CROP’s CEO Michael Yorke in a statement. “We continue to build out our brands in California and Nevada and our objective is, ultimately, to be in as many states as possible."

Inflection points:

The majority of US cannabis operations have little or no means to secure financing, and CROP fills a gap, in helping legal cannabis operations with capital requirements, in exchange for lease/management fees. 

And it's not just in the US. The regulatory environment globally is undergoing major transition. Growers/producers are challenged with struggling to fund land, equipment and cover expansion costs, with many ripe for strategic partnership opportunities.

The company receives a 60% preferential payback via lease and management fees on greenhouse infrastructure/related equipment, until its deployed capital is
returned in full, when CROP typically looks for a 30% to 49% interest in the real estate and infrastructure, and will receive dividends indefinitely. 

The early bird gets the worm, and CROP is an early participant in a global emerging marketplace, being well-positioned for full North American recreational legalization.

CROP Infrastructure has set a high bar in the cannabis industry and has a wide runway for potential future growth. 

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