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 control checks
INSULATION: Fully foam insulated with sprinklers
BUILDING: Metal (new roof and new siding)
PARKING: 4-6 Spaces (more available on adjacent lot)
4300C West End Road | Arcata, California 8 HUMBOLDT COUNTY EQUIPMENT
C1D1 HAL EXTRACTION POD APECKS SUPERCRITICAL CO2 MASTER BILT SUB-ZERO (VOLATILE USE) EXTRACTION MODULE WALK-IN FREEZER (NON-VOLATILE USE)
• Focus on safety (UL Certified) • Focus on safety (UL Certified) • Energy efficiency (polyurethane has great temperature- • “One-size fits most” • 20 Liter vessel retaining properties)
• 20 Amp, 240 Volt (single-phase • Fully automated, closed loop • Superior moisture resistance input) system (recovers 95% of CO2) • Maximum walk-in storage • Quietly processes 25-31 space due to thinner walls pounds of cannabis in 24 hours • Dead-bolt locking available
4300C West End Road | Arcata, California 9 HUMBOLDT COUNTY First Floor, Manufacturing Premises
1ST FLOOR DRAWINGS
First Floor:
= Distribution Premises
All other first floor area besides Roll up door bathroom = Manufacturing Premises
A Loading and Unloading A5.1 3-SECURED ACCESS COM MON AREA
1-TYPE 6 LIMITED ACCESS AREA Apex CO2 Extractor Equipment 10-PRODUCT STORAGE
9 - LIMITED ACCESS COMPOST Nonvolatile WASTE MANAGEMENT Extraction Activities AREA TYPE 6&7 FREEZER
C1-D1 Booth
5 17 RISERS @ 68" EA. 16 TREDS @ 11" 4-TYPE 7 LIMITED ACCESS AREA 5-TYPE 6 & 7 LIMITED ACCESS AREA Secondary Processing
4300C West End Road | Arcata, California 10 HUMBOLDT COUNTY Second Floor, Elevated Up Distribution Premises HDR 4 4X
4X12 HDR
OPEN TO BELOW
HDR 2- 13/4 X 9-1/2" 6 MICROLAM 4X HDR HDR 4 4 4X 4X
2- 13/4 X 9-1/2" MICROLAM
2ND FLOOR DRAWINGS
FRAMING PLAN REVISED
ALL OF SECOND FLOOR IS DISTRIBUTION PREMISES
secure storage for batch sampling in secure cage
PACKAGING A 7 - TYPE 6&7 A&M A5.1 PACKAGING AREA OPEN TO BELOW labeling OFFICE packaging
5 pre-roll manufacturing 17 RISERS @ 6 8" EA. 16 TREDS @ 11"
PRODUCT INTAKE OFFICE & BATCH SAMPLING DN SINK STORAGE MECH Security Storage
SECOND FLOOR PLAN REVISED STAIR SECTION A-A 4300C West End Road | Arcata, California 11 HUMBOLDT COUNTY ARCATA, CALIFORNIA (HUMBOLDT COUNTY)
Arcata is a city adjacent to the northern portion of Arcata Bay in Humboldt County, California. Located 280 miles North of San Francisco, its population is estimated to be 18,257. It is home to Humboldt State University, which boasts a student body of approximately 7,800 students. Arcata is located along the beautiful coastline of Northern California and is accessible by land, water, and air travel.
ARCATA EUREKA REDDING
Arcata is home to the Field Office of the Federal Bureau of Land Management, which is responsible for the administration of natural resources, lands, and mineral programs on approximately 200,000 acres of public SACRAMENTO land in Northwestern California. The city has a total area of 11 square miles, of which 9.1 square miles is land NAPA and 1.9 square miles is water.
The area’s rich soil and Mediterranean climate are to weed what the geology of the Napa Valley is to wine. The SAN FRANCISCO morning marine layer covers the hills in a dense, plant-nourishing fog while the “terroir” adds a unique flavor to the finished herb.
In terms of indoor, hydroponically grown cannabis, there may not be much difference between a plant grown in Arcata and one grown in Los Angeles. But the same is not true for cannabis grown outdoors. Just as wine connoisseurs sing the praises of Napa Valley or France’s Burgundy region, some in the cannabis business say the Emerald Triangle’s soil itself is special.
Humboldt-grown weed even carries ‘proof of origin’ labeling. 4300C West End Road | Arcata, California 12 HUMBOLDT COUNTY Arcata has a cool summer Mediterranean Climate, which is dominated by marine influences associated with Humboldt Bay and the Pacific Ocean. These influences make the climate in the city much cooler than that of a typical Mediterranean climate and more on par with that of an oceanic climate. On average, Arcata experiences 40 to 50 inches of rain per year, though there is a short but pronounced dry season from June to September. Northerly winds keep the spring very cool and create a coastal upwelling of deep, cold ocean water. This upwelling in turn results in foggy conditions throughout the summer, with high temperatures commonly in the 50s and low 60s. Yet just a few miles inland the temperatures may be up to 25 degrees warmer in the summer and fall. Winter high temperatures average in the low 40s to mid-50s, with lows in the mid-30s to lower 40s. Temperatures infrequently dip below 30 °F in the winter, and nearly as infrequently climb above 72 °F in the summer and fall.
CLIMATE DATA FOR ARCATA, CA
MONTH JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YEAR AVG. HIGH °F (°C) 55 56 56 57 59 62 63 64 64 62 58 55 59 -13 -13 -13 -14 -15 -17 -17 -18 -18 -17 -14 -13 -15 AVG. LOW °F (°C) 41 42 43 44 48 50 52 53 51 48 44 41 46 -5 -6 -6 -7 -9 -10 -11 -12 -11 -9 -7 -5 -8 AVG. PRECIPITATION INCHES 6.1 5.5 5.7 3.2 1.5 0.7 0.2 0.3 0.8 2.5 5.6 7.3 39.4 (MM) -150 -140 -140 -81 -38 -18 -5.1 -7.6 -20 -64 -140 -190 -993.7 AVG. SNOWFALL INCHES 0 0.1 0 0 0 0 0 0 0 0 0 0.1 0.2 (CM) 0 -0.25 0 0 0 0 0 0 0 0 0 -0.25 -0.5 AVG. PRECIPITATION DAYS 12 11 13 9 5 2 0 1 2 5 11 13 84 AVG. RELATIVE HUMIDITY (%) 83 83 84 85 85 85 87 88 87 86 85 83 85 AVG. DEW POINT °F (°C) 42 42 44 45 48 51 53 53 51 49 45 42 47 -6 -6 -7 -7 -9 -11 -12 -12 -11 -9 -7 -6 -9
4300C West End Road | Arcata, California 13 HUMBOLDT COUNTY CANNABIS INDUSTRY OVERVIEW
The cannabis industry entered the year stronger than every thanks to steady growth in mature markets and rapid expansion in the newly legal markets. Sales have fared well since the COVID-19 pandemic – consumers spend more on cannabis in times of economic hardship, heavy stress, and high anxiety. Adult-use cannabis sales remained steady even after the additional unemployment benefits ended. In the United States, industry sales are expected to surpass $15 billion by year end, up 40% over 2019. According to Marijuana Business Daily, sales are expected to more than double within four years and surpass craft beer sales by 2024.
California sales were doing exceptionally well despite the coronavirus and wildfires ravaging the state. Sales are estimated to be more than $2 billion by year end. Sales growth was 80% year-over-year pre-covid but is only increasing at 40% post-covid. The drop can partly be attributed to the wildfires affected all lines of business, from cultivation to retail sales.
Despite the “vape scare” and hospitalizations in late 2019, vape sales have rebounded in 2020. Vape, concentrates, and edibles are up 64% - 85% over prior year. Meanwhile, infused products such as beverages, capsules, tinctures, and topicals are up 68% - 132% over prior year.
In terms of manufacturing, most businesses carry very high expectations for the future. 87% of all cannabis manufacturers expected business to be much better in the next twelve months. The average profitable cannabis manufacturer reports 21% profit margins.
4300C West End Road | Arcata, California 14 HUMBOLDT COUNTY EMERALD TRIANGLE (HUMBOLDT, TRINITY, AND MENDOCINO COUNTY)
HUMBOLDT COUNTY INDOORS EMERALD FAMILY FARMS
BEAR EXTRACTION HOUSE (WOX, URSA)
UPNORTH HUMBOLDT
EMERALD FAMILY FARMS
ARCATA X TRUE HUMBOLDT
ELEVATED UP ELEVATED UP
TALKING TREES FARMS EEL RIVER ORGANICS
ROYAL KEY CONCENTRATES
SISU
LEVEL ONE LEVEL TWO MANUFACTURERS MANUFACTURERS (NON-VOLATILE) (VOLATILE) PARK & BARLEY 40 22 LICENSED LICENSED LICENSED LICENSED NON-STOREFRONT CULTIVATORS CULTIVATORS RETAILERS 2,765 196 45 5 RETAILERS (DELIVERY)
4300C West End Road | Arcata, California 15 HUMBOLDT COUNTY 4300C West End Road | Arcata, California HUMBOLDT COUNTY PREMISES: 4300C West End Road LEASE ABSTRACT Arcata, CA 95521
USE: LANDLORD: Marijuana, processing, warehousing, research, testing, and new Dolly Yarden Industrial Park, LLC marijuana product development.
TENANT: BASE TERM: Elevated Up, a California Mutual Benefit Corporation dba Humboldt Elevated The base term of the lease is Sept 15, 2016 - Sept 15, 2026
OPTION TERM: Tenant has (1) 5-Year option to extend until Sept 15, 2026. During the option term, the base rent shall be $7,500 with 3% increases per RENT ADJUSTMENT LEASE TERM MONTHLY RENT YEARLY RENT annum. Sept. 2016 $5,000 $60,000 LEASE TYPE: Greater of 3% or CPI Sept. 2017 $5,150 $61,800 NNN (Assuming 3% Annual) Sept. 2018 $5,305 $63,654 RENT COMMENCEMENT: Sept. 2019 $5,464 $65,564 September 2016 Sept. 2020 $5,628 $67,531 UTILITIES: Sept. 2021 $5,796 $69,556 Tenant shall be responsible for all metered utilities. Sept. 2022 $5,970 $71,643 INSURANCE: Sept. 2023 $6,149 $73,792 Property Insurance: Tenant shall carry property damage insurance to Sept. 2024 $6,334 $76,006 cover cost of property. Liability Insurance: Tenant shall carry liability insurance of $1,000,000. Sept. 2025 $6,524 $78,286 Sept. 2026 $6,720 $80,635 REAL ESTATE TAXES: Tenant shall be responsible for its own personal property tax.
OPTION TERM REPAIRS AND MAINTENANCE: Tenant, at tenant’s sole cost and expense, shall be responsible for any Sept. 2027 $7,500 $90,000 alterations made to the premises. Landlord shall be responsible for Annual roof, siding, water, sewer, sprinklers and removal of debris. Increases Greater of 3% or CPI TENANT ASSIGNMENT AND SUBLETTING: Tenant shall not sublet or encumber all or any part of Premises, or assign or transfer this agreement or any interest in it without the prior written consent of Landlord, which shall not be unreasonably withheld.
4300C West End Road | Arcata, California 17 HUMBOLDT COUNTY CONFIDENTIALITY AND DISCLAIMER PREPARED BY:
The information contained in this offering memorandum is furnished solely for the purpose of review by a prospective buyer CHAD DIXON of the business (“Business”) and is not to be used for any other purpose or made available to any other person without the Senior Associate express written consent of Stream Realty Partners. The information contained in this package is from sources deemed reliable Retail Investments but is not guaranteed by Stream Realty Partners in any way and is subject to change in corrections, errors and omissions or Lic. #02053108 withdrawal without notice. All information is presented “as is” without representation or warranty of any kind. Such information 949.203.3047 includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and [email protected] other factors which are subject to uncertainty and may not represent the current or future performance of the Business. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult MICHELLE SCHIERBERL with independent legal and financial advisors, and carefully investigate the economics of this transaction and Business’s suitability Senior Vice President Retail Investments for your needs. Lic. #01000058 949.203.3060 Summaries of any documents are not intended to be comprehensive or all-inclusive, but rather a general outline of the pertinent [email protected] provisions contained herein. Prospective buyers should rely upon their own financial projections and conclusions without reliance upon the material contained herein and conduct their own independent due diligence to determine the condition of the Business DONALD ELLIS and the existence of any potentially hazardous material used in the construction or maintenance of the Business or located at the Senior Vice President site. Retail Investments Lic. #01878316 ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK. 949.203.3074 No copies of this package may be made in whole or in part without the prior written consent of Stream Realty Partners. This [email protected] package is solely the property of Stream Realty Partners and may be used only by parties approved by Stream Realty Partners. By accepting this package, the party in possession hereof agrees that the package and its contents are of a confidential nature and will be held and treated in the strictest confidence.
The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Business, and/or to terminate discussions at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither Stream Realty Partners (including its parent, successor, or affiliate entities), nor the Owner shall STREAM REALTY PARTNERS have any legal commitment or obligation except as set forth in a fully executed, definitive sale agreement delivered by the Owner. Greater Los Angeles Photos herein are the property of their respective owners. Use of these images without the express written consent of the owner 3161 Michelson Drive, Suite 100 is prohibited. Stream and the Stream logo are service marks of Stream Realty Partners, L.P. and Stream Realty Partners-orange Irvine, CA 92612 County, L.P. All other marks displayed on this document are the property of their respective owners. 949.203.3030
4300C West End Road | Arcata, California HUMBOLDT COUNTY