CROP Infrastructure

Funding Real Estate and Infrastructure in the Cannabis Sector

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

Overview

CROP Infrastructure Corp. (CSE:CROP) is a publicly traded Canadian corporation enabling licensed cannabis producers to achieve sector growth by providing capital for the acquisition of land, real estate, branding and infrastructure for their operations. Sensing increasing potential in the US cannabis market, CROP Infrastructure is an early mover targeting opportunities in a variety of states—Washington, California and Nevada, particularly—and is keeping its eye on legalization potential across North America.

CROP Infrastructure’s business model is aimed at addressing issues in the cannabis industry, including the fact that financial institutions are not yet willing or able to fund companies in the sector and that, as a result, growers lack the capital to effectively establish and grow their operations. As regulations in legalized cannabis jurisdictions do not preclude organizations from funding real estate or equipment for the sector, CROP Infrastructure is entering a niche position in which it can provide capital to licensed producers without the need of being producers themselves.

To date, CROP Infrastructure has begun by rolling out its business model in Washington State and is in the process of constructing a 43,680-square-foot cannabis production facility. This is in partnership with three brands that will continue to develop as they partner with the company: Evolution, Tiffany and Trikom. Once the 43,680 square-foot canopy is complete and in full-scale production, CROP Infrastructure anticipates the facility will have tenant production potential to produce 2,000 pounds per month.

The company has also entered into a Membership Purchase Agreement with Humboldt Holdings LLC., under which CROP Infrastructure has agreed to invest $2 million in land, equipment and the development of 20,000 square feet of canopy, added to the existing 10,000-square-foot greenhouse on the property. Once the 30,000 square feet are completed, tenant production is estimated to be 2,000 pounds of flower per month. The project is intended for lease and brand licensing to licensed cannabis producers and, in return for its funding, CROP Infrastructure now has a 30 percent stake in Humboldt Holdings.

“This acquisition represents our entry into California, the largest cannabis market in the world,” said CROP Infrastructure Director N. Alex Horsley. “Work is now underway on Humboldt’s facility to expand the greenhouse facility to 30,000 square feet of canopy with our new state-of-the-art greenhouse design. CROP continues to aggressively pursue new opportunities to expand its portfolio of tenant growers and infrastructure assets in strategic licensed jurisdictions.”

Company Highlights

  • Funding a real estate and infrastructure investment portfolio within the cannabis space
  • Investments paid back through lease, branding, and management fees
  • Plans to deploy model across North America as recreational market legalization spreads

The CROP Infrastructure Business Model

CROP Infrastructure funds the build of income-producing real estate for the recreational cannabis production sector. To this effect, the company invests in the development of the land, the build of any buildings, and the deployment of specialized structural features like greenhouses, fertilizer storage and irrigation equipment and more. The property is then leased to licensed producers or processors and revenue is supplemented by an additional management fee, whereby CROP Infrastructure receives a 60 percent preferential payback through these fees. Once the investment is paid back, the company retains a 30 percent interest in the property and infrastructure through the same fees indefinitely, which it plans to deploy in other legal jurisdictions.

As CROP Infrastructure is centered around providing affordable solutions to its tenants, the company is also focused on working within jurisdictions that have low cost of power. This allows its tenants to significantly lower the cost of production and gives them the opportunity to offer high-quality product at a lower price point while still generating significant revenue.

On top of its real estate and infrastructure offerings, CROP Infrastructure also offers financing opportunities for marketing, brand and distribution development. Aimed at helping brands achieve increased market penetration, CROP Infrastructure offers its expertise and vast network of industry experts.

Legality

Within each of the states that have developed regulations for the lawful cultivation of cannabis, there are no provisions preventing organizations from investing in real estate holdings or equipment leaseholds specifically for the industry. As regulations are aimed at the taxation of cannabis sales and revenues—and not at mitigating growth in the industry—CROP Infrastructure has seen the opportunity for partnering with licensed producers that need support with regards to their capital.

Jurisdictions

Moving forward with the growth of the cannabis sector in North America, CROP Infrastructure plans on investing within every production-legal jurisdiction so as to continue providing revenue growth opportunities. To this effect, the company has started work in Washington, and will continue with expansion opportunities into California and Nevada, while also keeping an eye on the additional 25 states where cannabis is broadly legalized.

Planned production and yield

Within each facility, CROP Infrastructure has designed greenhouses that measure 3,640 square feet, with the capacity to host 1,350 cannabis plants that develop on a 55 to 60-day cycle. This should allow for tenants to stagger production and harvest plants every other day, on a collective average rate of 30,645 grams per day (919,350 grams per month) across the entire 43,680-square-foot facility.

Management

Michael Yorke—CEO and Director

Michael Yorke began his career in the financial sector with the Royal Bank of Canada in 2001. He subsequently served as an active trader and value investor for the last 14 years. He went on to provide consulting services to several publicly traded companies in addition to organizing capital market events with On-Page Media. He is fluent in three languages and has traveled extensively around the globe. He has earned an International Business Diploma, Bachelor of Business Administration degree, and is currently working towards a Masters of Business Administration degree through the British Columbia Institute of Technology.

Abbey Abdiye—CFO

Abbey Abdiye brings extensive experience in the financial sector with both public and private companies. He is a Chartered Professional Accountant (CPA), current CFO of Tower One Wireless Corp. and other reporting issuers, where he managed the responsibility for all financial, fiscal management, regulatory compliance, and reporting aspects of corporate operations. He also provides strategic guidance and direction in capital structuring and is engaged with innovative financing programs that leverage sales and development opportunities.

Nigel Alexander Horsley—Director

Alex Horsley has twelve years of capital markets experience with a primary focus on corporate communications and finance for small to mid-cap public companies. He has extensive long-term investor, analyst and broker relationships across Canada, the United States and the UK. He has been involved with a number of charities for women, children, health care and international NGOs.

Twila Jensen—Director

Ms. Jensen is a Senior Capital Markets Strategist with Stockhouse.com, Canada’s leading financial community and a global hub for affluent investors, with over one million unique monthly visitors. Ms. Jensen also acts as an Independent Director for two other TSX Venture Exchange listed companies, Durango Resources Corp. and BTU Metals Corp. Ms. Jensen has over 18 years of experience working in the capital markets within sales and marketing roles, as an independent director and also part of audit committees. She has worked with hundreds of public companies across North America in various sectors over the last two decades.

Christine Mah—Director

Christine Mah brings 10 years direct experience working with reporting companies assisting with corporate management, systems integration, accounting procedures and administrative services. Her experience includes assisting companies within industry sectors such as communications, technology, and consumer goods. She offers relevant governance expertise from her audit committee experience and hands-on participation in the yearly audits of company’s such as Evolving Gold Corp. She is an experienced professional with a Marketing Diploma from the British Columbia Institute of Technology.


 

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