Early this morning Arcturus GrowthStar Technologies (TSX: AGS, OTC: AGSTF) announced an LOI to purchase a farm in the great state of Florida that produces ornamental plants which are basically flowers, trees, fruits, vegetables etc. It’s actually a huge business down here and there’s definitely a significant demand for that. Now, you might be thinking why would a company in Canada take steps to buy a farm in Florida, when they can buy a farm anywhere else they wanted to? Let’s play devils advocate for a second and say that the CEO Bill Gildea really likes Orchids & Lilly’s and he loves a farm that is operating in the black, ie making money at a profit. Arcturus specialized in Controlled Environmental Agriculture (CEA) which is a fancy way of saying that they can increase yields of flowers, vegetables, or Cannabis by doing a bunch of sciency stuff I won’t bore you with; think hydroponics, aeroponics and most importantly vertical farming.
I reached out to the company this morning to ask one very important question; How does the current facility have their greenhouse configured? Is it flat tables with plants or is it racked layers that are vertical? The answer was that the current layout in the greenhouse is one that is entirely FLAT. So, if AGS just wants to be in the ornamental flower game they can take a farm that is doing $400,000 in profit, $2,600,000 in revenue and on the conservative side triple the yield with CEA tech to $1.2 million in profit, or $7,800,000 in revenue or on the realistic end quadruple output to $1.6m profit and $10.4m in revenue. One important thing to note, CEA is efficient and cost effective which will mean that there is likely more of a profit margin and the elimination of redundancies with regards to personnel. Making even the purchase of an Ornamental farm a profitable endeavor.
Now let’s talk about the part of the PR that said “zoned for cannabis or fits the criteria for cultivation in Florida.” In case you do not already know, Florida’s ballot 2 initiative comes with a few strings attached, the biggest one being that anyone that wanted to produce cannabis via license had to be in the agriculture business for at least 30 years; this farm has been in operation since 1959. The 30 year’s in business has been a non-starter for many people going after the 6 auctioned off licenses, not to mention the insane capital needed for those first 6. The good news is, 6 groups will not be able to meet production for the state and with the passage of Amendment 2 this will definitely change. Also, I know a few Canadian Companies that are already LP’s gunning for Florida, which is interesting. Getting into Florida first ahead of all the states on the west coast seems like a smart move, plus Florida has great weather for cultivation of cannabis (so I’ve heard). Either way, I’m sure we will get more details on what AGS is planning, specifically from John Sweeney who use to be the VP of Operation of the Tilray facility. That facility is 60,000 square feet and owned by Privateer holdings (owners of Leafly, Marley Natural etc). Hopefully Tuesday ends up being a good news day for Florida, Nevada and California, because I’m sure we will be hearing from people like John Sweeney much more. FYI polling data shows that Florida’s Amendment 2 is polling at 73% in favor, it needs 60% (super majority) to pass, California is looking good and Nevada is very close, but pulling towards passing…
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