High Hampton Holdings

Consolidating California’s Cannabis Industry

This profile is part of a paid investor education campaign.*

Overview

High Hampton Holdings Corp (CSE:HC,OTCMKTS:HHPHF FSE:OHCN) is a vertically integrated company seeking to consolidate California’s booming cannabis industry.

Developing its presence in the Golden State, High Hampton is developing offerings in the finance, real estate, licensing, distribution and operations of the cannabis industry. These will take shape under the company’s capital markets, compliance, licensing and brands & products supply chain teams.

Using their experienced management team to build out a vertically integrated supply chain, the company is targeting the acquisition of industrial and commercial properties in cannabis-friendly municipalities, licensed cultivators, licensed distributors, as well as key brands in the industry. The active consolidation of the Californian market will be conducted by equity, royalty and direct property ownership with leasing agreements.

High Hampton believes that distribution will be a key factor in establishing a leading presence in California. As such, the company’s priority is to establishing distribution points across California. As a starting point, High Hampton has established a foothold in the distribution market through the acquisition of 420 Realty, a company developing a vertically-integrated model in the outskirts of Los Angeles, and of 8 Points Mgmt and its subsidiary Bravo Distro.

The Toronto-based company also owns an enviable position in California thanks to its acquisition of CoachellaGro Corp. CoachellaGro was recently granted its conditional use permit (CUP) for a full-service production facility for licensed medicinal cannabis cultivators. The company plans to build out a 197,000-square-foot closed-loop processing complex situated on 10.8 acres of land as well as a 57,000 square foot head house in the progressive city of Coachella, California.

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High Hampton has engaged Aurora Larssen Projects (ALPS), a wholly owned subsidiary of Aurora Cannabis Inc (TSX:ACB), for the design of the CoachellaGro facility. Once complete, CoachellaGro’s facility will host 197,000 square feet of indoor cultivation space, available for lease. Being closed loop, these facilities enable operators to grow a high-quality, organic product free of heavy-metals and pesticides.

As part of High Hampton’s growth strategy, its subsidiaries will continue to acquire lands and buildings in the appropriate zones in order to engage in both royalty and leasehold agreements with tenants.

High Hampton also possesses a skilled management team with strong cannabis, political, legal and capital markets background. CEO David E. Argudo brings a 25-year career in cannabis with experience in biopharmaceuticals and cancer research. As an elected city official for over eight years, Argudo pioneered local tax measures for cannabis in California and spent several years consulting on municipal cannabis ordinances.

Another management asset is High Hampton Chairman of the Board and Director Richard Polanco, a former California State Senate Majority Leader. Polanco brings a wealth of legislative experience and political connections to the team. Polanco was a founder of the California Latino Legislative Caucus, a career advocate for medicinal cannabis, and an active proponent for Proposition 64.

Company Highlights

  • Established distribution network through 8 Points Mgmt LLC and 420 Realty acquisitions
  • 254,000-square-foot facility to be built in the progressive City of Coachella expected to open in Q1 2019
  • 197,00 square feet of combined growing space with low growing costs per foot
  • Expected topline revenue in first 12 months of approximately $50 million
  • Veteran management team with over 30 years combined cannabis experience
  • Chairman and Director Richard Polanco is a former California State Senate Majority Leader

US & Californian Cannabis Market

North American cannabis sales grew to $9.2 billion in 2017 and is anticipated to reach $47.3 billion by 2027.

The California medicinal cannabis market alone provides cannabis producers a solid foundation for profitability, with a reported market size of $2.81 billion in 2016. Medicinal cannabis has been legalized for 20 years in California, making it a mature market with approximately one million medical patients. That is seven times the size of the medical market in Canada and a third of the legal market in North America. With the Age 65+ Boomer population slated to double between 2015 and 2030 — and around 260 million cannabis tourism visits with Proposition 64 — California’s medicinal market can only grow.

But through its subsidiaries, High Hampton gains access to a highly lucrative and rapidly growing market. The company plans to actively buy up land and buildings located in cannabis-friendly municipalities and then engage in both royalty and leasehold agreements with tenants.

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Distribution

Understanding that distribution holds the key to becoming a leader in California’s cannabis industry, High Hampton has been conducting acquisitions in the distribution space.

420 Realty LLC

In June 2018, High Hampton announced the acquisition of all membership interests of 420 Realty LLC, a distribution-focused company that has applied for multiple permits to vertically integrate in Cudahy, a city on the outskirts of Los Angeles. 420 Realty’s vertical integration would encompass cannabis cultivation, nursery, manufacturing, delivery and distribution licenses.  

The facility will also provide other services like white label manufacturing and extractions for licensed producers that do not have licenses for manufacturing or distribution.

8 Points Mgmt

In July 2018, High Hampton closed the acquisition of 8 Points Mgmt and its subsidiary, Bravo Distro LLC, which holds a distribution hub in West Sacramento. The company was founded by a team of alcohol distribution experts that also conceived one of the first companies in California to receive a permit for medical cannabis wholesale logistics, distribution and transportation.

Through Bravo Distro, the company offers services tied to sales, marketing, transportation and supply chain management for cannabis companies in California. Customers include dispensaries, delivery services, manufacturers, cultivators, as well as emerging players in the CBD space including clinics, universities and other research organizations.

In developing a significant network across the industry, Bravo Distro has also been collaborating with state agencies, taxation councils and legislators.

CoachellaGro Acquisition

High Hampton acquired CoachellaGro Corp. in August 2017 in exchange for shares in High Hampton. In addition to the transaction, High Hampton conducted a $5.6 million financing to fund acquisition of Coachella’s 10.8-acre property and further development of the site.

The proposed CoachellaGro closed loop cannabis facility is situated in a proposed industrial park, inside the city of Coachella, California.

The city of Coachella, located 45 kilometers east of Palm Springs, passed several ordinances which remain some of the most progressive in the state for medicinal cannabis cultivation. Starting in January 2016, the city adopted two ordinances permitting medical marijuana cultivation and manufacturing facilities. Since then, the city has granted several CUPs to companies including Cultivation Technologies Inc and Del-Gro.

CoachellaGro has also received a CUP for a full-service production facility to serve third party state licensed medical cannabis producers. Since receiving the CUP, High Hampton has also engaged ALPS, a leading hybrid greenhouse engineering and design consultancy, for the design of the facility.

“As we near the start of construction in Coachella, we continue to assemble a best-in-class team for this next phase,” said Argudo. “By engaging and integrating the work of ALPS with Infrastructure Engineers Ltd and general contractor Vertical Construction Inc. we will be able to finetune our design plans ensuring the construction of highly-efficient cultivation facilities, resulting in high-quality, low-cost production.”

When complete, the 254,000-square-foot development project will comprise three buildings with 197,000 square feet of combined canvas area, divided into numerous areas that can be leased to prospective tenants.

Revenues will be gained through a long-term leasing model. Type 2A licensed operators (i.e., cultivators) will take 95 percent of the total available space and pay CoachellaGro a monthly rent for access to each facility as a base rate. On top of that, CoachellaGro intends to charge a processing fee for the use of its environmentally controlled product curation rooms and vaulted storage.

Eventually, the company plans to augment its lease revenues with additional services and consulting — with potential for royalty partnerships.

Management

Christian Scovenna—Interim CEO, Sr. VP Corporate Finance and Director

Christian Scovenna has over eleven years of capital market experience. As Managing Director at a boutique firm, he led six portfolio companies within the group, raising capital, business development. He also spent four years with Frontier Merchant Capital Group as Director & Senior VP of Operations and most recently as Managing Partner with Lions Edge Capital. Over the years, he has been successful in completing numerous M&A activities and capital raises. He currently serves as Director & Sr. VP of Business Development for Enforcer Gold Corp. (TSXV:VEIN).

Richard Polanco—Chairman and Director

Richard Polanco is a former California State Senate Majority Leader and a Founder of the California Latino Legislative Caucus (1990). He is a career advocate for medicinal cannabis in California, and an active proponent for Prop 64 legalization. He is currently a strategic advisor to a company focused on cannabis testing. 

Paul Mann—COO

Paul Mann is a successful serial entrepreneur who’s experience and network spans the globe. He has managed and successfully exited nine start-ups on three continents including Cavio Corporation, Veridicom International, National Connect, The Pacific Business Development Corporation and Winsight Technology.

Fiona Fitzmaurice—CFO 

Fiona Fitzmaurice is a chartered certified accountant with 12 years of experience in accounting and financial control. She is currently CFO of Enforcer Gold Corp. (TSXV:VEIN) and acted previously as financial controller for Noront Resources Ltd. where she was involved in private placements, prospectus filings, flow-through financings and corporate audits. Prior to joining Noront, Fiona acted as a senior accountant and Controller for both private and publicly listed junior companies.

She holds a BA in accounting and finance from the Athlone Institute of Technology in Ireland.

Daniel Petrov—Director

Daniel Petrov has founded a number of successful Cannabis companies and most recently served as Executive Vice President at Aurora Cannabis Inc. (TSXV: ACB) from prior to its listing onto the CSE until mid-2016. Petrov is currently the CEO of Aura Health Studio, a medical marijuana dispensary licensed by the City of Vancouver. 

Robert Allen—Director

Robert Allen is an investor, entrepreneur, C Suite Executive with 20 plus years of experience building, leading and advising both public and private corporations through complex restructurings, acquisitions, divestitures and capital market transactions

He has acted as both CFO and CEO to large public corporations (Ainsworth Lumber 2003-2009, TimberWest 2009-2012).

Cam Birge—Director

Cam Birge has over 20 years of experience advising and working with public and private companies in Canada, the United States and Mexico and is well connected both in capital markets and within the cannabis and other sectors. As the former CFO with Australis Capital Inc., a U.S. spin-off of Aurora Cannabis Inc. focusing on cannabis investments, he was directly involved in investment decisions related to the U.S. cannabis industry in both public and private companies.


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