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Elevated UP Arcata, California (Humboldt County) Turnkey Cannabis Manufacturing & Distribution Facility Type 6, 7 and 11 Licenses 4300C West End Road | Arcata, California HUMBOLDT COUNTY PREPARED BY: CHAD DIXON Senior Associate Retail Investments TABLE OF CONTENTS Lic. #02053108 949.203.3047 [email protected] 1. Executive Summary MICHELLE SCHIERBERL Senior Vice President 2. Investment Highlights Retail Investments Lic. #01000058 3. Licenses 949.203.3060 [email protected] 4. Capital Invested DONALD ELLIS Senior Vice President Retail Investments 5. Cannabis Industry Overview Lic. #01878316 949.203.3074 6. Humboldt County Overview [email protected] 7. Lease Abstract STREAM REALTY PARTNERS Greater Los Angeles 3161 Michelson Drive, Suite 100 Irvine, CA 92612 T 949.203.3030 4300C West End Road | Arcata, California 2 HUMBOLDT COUNTY BUSINESS TYPE: THE OFFERING Manufacturing and Distribution LICENSES: Type 6, Type 7, and Type 11 4300C WEST END ROAD ARCATA, CA 95521 (HUMBOLDT COUNTY) MONTHLY RENT: $5,628 (CPI or 3% annual increases) Stream Realty Partners is pleased to present for sale Elevated Up – an almost turnkey cannabis manufacturing (Type 6 and Type 7) and distribution (Type 11) facility with grant of provisional LEASE TERM: license now before the state agencies for approval of the annual license. This brand new facility Through 2026 (with 5-Year option) is located in Humboldt County, California, the heart of the Emerald Triangle, which is home to over 2,700 licensed cultivators and potential vendors. With work performed to date over the LEASE TYPE: past four years, you will save four-to-five years in licensing, entitlements, and building to code. NNN All equipment is included in the sale. The buildout is designed for extraction, processing, cold storage, lab space, and distribution. SIZE OF BUILDING: 2,905 SF Equipment includes C1D1 HAL Extraction Pod, APEX Extraction Module, Master-Bilt sub-zero freezer, and 800 amps of power to boot. The business has a favorable lease in place with options to renew until 2031, with lease rates that are below neighboring properties. POWER: 800 Amps, 240v – 600v Elevated Up is in the “Cannabis Innovation Zone” in the City of Arcata and neighbors to some of the most reputable brands in California. The business is permitted to manufacture 24 hours ZONING: per day, 7 days a week. Manufacturing licenses may be have reached the limit for this area and Cannabis Innovation Zone as a result the offering is extremely rare and one-of-a-kind. SECURITY: Humboldt County is part of the largest cannabis-producing region in the United States. It has Extensive (Wired cameras and been on the forefront of marijuana since the 1970s as the climate is especially conducive to 24-hour onsite security) cultivation. With over 20% of the residents working in the cannabis industry, it is known to produce some of the best tasting cannabis in the world. Flower from the area carries a “proof LEASE OR OWN: of origin” labeling, guaranteeing quality across the supply chain. California law protects this Lease proof of origin and from a branding perspective the value of such proof of origin will only increase in value over time as more states and international markets become available. FF&E: Included in Sale (Turnkey Offering) FINDER’S FEE AVAILABLE! DOMAIN NAMES: 10 Total,4300C including West EndDesignerDrugs.com Road | Arcata, California 3 HUMBOLDT COUNTY INVESTMENT HIGHLIGHTS TURNKEY CANNABIS MANUFACTURER & DISTRIBUTOR Extremely rare cannabis license combination: volatile manufacturing, non-volatile manufacturing, and distribution license all in one facility. There are only 182 volatile manufacturing (Adult and Medicinal) licenses in the State of California, less than 1.8% of the active licenses. EMERALD TRIANGLE The Emerald Triangle (Humboldt, Trinity, and Mendocino Counties) is the largest cannabis- producing region in the United States as the climate is extremely conducive to marijuana growers. It is known to produce some of the highest quality marijuana in the world with great flavor. Marijuana grown here carries “Proof of Origin” labeling. It is estimated that 20% of residents in Humboldt County make a livelihood off cannabis (also known as “Stoner’s Paradise”). $2.3M IN CAPITAL INVESTED The founders have invested over $2.3M to build out the licensure to date and construction at this facility. All PP&E, including domain names (“DesignerDrugs.com”) will be transferred upon sale. The building was thoughtfully designed for extraction, manufacturing, processing, cold-storage, lab space, and distribution. The power supply is 800 amps, 220v – 600v. LAUNCH OPERATIONS The arduous licensing process takes four to five years to complete, as the regulations for volatile manufacturing is especially stringent. The founders have worked with the state agencies to construct a facility for which the annual licensure should be made available and invested heavily to ensure safety and functionality. The prospective purchaser should have familiarity with state licensure requirements as well as any prospective buyer will be required to provide change of ownership information to the state as the sales transaction progresses through escrow. PRODUCE AND DISTRIBUTE YOUR OWN PRODUCTS Your own packaging, labeling, and distribution allows “branding” to be complete. As you control the manufacturing and distribution, you can ensure quality and profitability throughout the process. 4300C West End Road | Arcata, California 4 HUMBOLDT COUNTY INVESTMENT HIGHLIGHTS SYNERGIES WITH DISTRIBUTION LICENSE With access to countless cultivators in Humboldt County, a buyer can pair the manufacturing and distribution businesses to maximize synergies. Furthermore, you have the ability to package, label, and distribute products that are made in house. The Type 11 License permits distribution to any licensed business in the state. 24-HOUR CANNABIS ZONE Elevated Up is located in the Cannabis Innovation Zone (“CIZ”) in the City of Arcata. There is no residential in the zone and the city allows operations 24 hours per day, 7 days per week. There is 24 hour on site security. RAPID GROWTH IN CALIFORNIA The California market is positioned for rapid growth as it is an immature market. In 2020, the sales in California are projected to be $4.3 to $5 billion representing a 40% growth from 2019. The customer base is 6 to 7 million with approximately 600 retail stores. Nationwide, sales are expected to be $15 billion in 2020 with expectations to double by 2024. SEED TO SALE” POTENTIAL The company can integrate smoothly into your existing operations to help you become vertically integrated and realize cost synergies across the supply chain. With facility and licensure work almost complete, this offering is a great start if you are looking to launch a career in the cannabis industry. Furthermore, under IRS code 280E, only deductions a cannabis company can take pertain to cost of goods sold. Vertically integrated retailers can take higher tax deductions, as these companies are directly involved in the production of cannabis and infused products. 4300C West End Road | Arcata, California 5 HUMBOLDT COUNTY TOTAL INVESTMENT TYPE 7 LICENSE LEVEL 2 MANUFACTURING VOLATILE MANUFACTURING CONSTRUCTION $510,000 • Extraction using “Volatile” • Extraction solvents must be food- LEGAL-THIRD PARTIES $70,000 substances, such as butane, grade propane, and hexane Hydrocarbon-based solvents must LEGAL-COMPLIANCE IN HOUSE $350,000 • • Much more stringent because be at least 99% purity using highly flammable substances CONSTRUCTION MANAGER-ARCHITECH $524,000 • Much more costly than Type 6 • Closed-loop extraction system license EQUIPMENT $360,000 • Certified by licensed California • Much more efficient manufacturing engineer process SECURITY SYSTEM $40,000 • Approved by local fire code • Elevated Up has both medicinal official and adult-use licenses CORPORATE TAXES, CPA, FILING FEES WITH STATE $38,000 PERMIT FEES $40,000 TYPE 6 LICENSE UTILITIES INTERNET AND PHONE $19,000 LEVEL 1 MANUFACTURING NON-VOLATILE MANUFACTURING TRANSPORTATION $51,000 • Extraction using “Non-volatile” substances, such as STORAGE $22,000 CO2, water, oils, or butter • Less stringent than Type 7 regulations DOMAIN NAME AND RELATED NAMES $15,000 • Elevated Up has both medicinal and adult-use licenses RENT (48 MONTHS) $262,000 TOTAL COSTS $2,301,000 TYPE 11 LICENSE TOTAL INVESTMENT: DISTRIBUTION Expenses since beginning the licensing process. Expenses are rounded to the nearest thousand. • Transporting cannabis goods between licenses, arranging testing of goods, and conducting the quality assurance review to ensure compliance with all packaging and labeling requirements 4300C West End Road | Arcata, California 6 HUMBOLDT COUNTY 4300C West End Road | Arcata, California 7 HUMBOLDT COUNTY PROPERTY DESCRIPTION 4300 West End Road, Unit C ADDRESS: Arcata, California (Humboldt County) SIZE OF BUILDING: 2,905 SF (room for expansion) 5,000 SF (Room for stackable 12x40 Refrigerated SIZE OF LAND: Containers, already hooked up) LOADING DOCKS: Two ENTRANCES: Two (Distribution & Manufacturing) Wired security cameras and 24-hour armed SECURITY: security patrol ZONING: Cannabis Innovation Zone “CIZ” (click for zoning) UTILITIES: Water, Electrical, Sewer, Trash, and Road Access POWER SUPPLY: 800 Amps, 220v-600v (Off Grid Power) EXTRACTION Three (Volatile, Non-Volatile, Mixed Use) ROOMS: PACKAGING Two (with vaulted ceiling dedicated to packaging) ROOMS: LOCKER ROOM: Included LAB SPACE: Included for quality