Cannabis-Rx, a publicly traded company that appears to be positioning itself in advance of a medical marijuana vote in Florida later this year, has acquired a trio of industrial buildings just north of the Sarasota-Bradenton International Airport.
The Scottsdale, Ariz.-based company paid $1.26 million for the 9.26-acre property, a former Wellcraft boat plant on 15th Street East that includes nearly 5 acres under roof. Assuming the project is able to go forward, it will become one of the largest marijuana grow operations in North America — but not the largest, according to Michael Mayes, chief executive of Chicago-based Quantum 9 Inc., a cannabis industry consulting firm.
“We are working with a company in Nova Scotia that has already acquired a 315,000-square-foot facility that we are now building out,” Mayes said. “The industry is actually trending more toward these extra-large facilities.” Old manufacturing plants like the one in Manatee are valuable targets because they typically already have heavy electrical power service and can be found in areas where land values are depressed.
As with all its properties, Cannabis-Rx plans to lease the buildings to marijuana-related licensees. Industry consultant Kris Krane of 4Front Advisors said he knows of several companies like Cannabis-Rx that find relatively cheap industrial property to retrofit as what he calls cultivation parks. “What they are likely to do is subdivide it,” Krane said. “Often, they would finance the grow equipment, the buildout, and then wrap all that cost either directly into the lease to the cultivators or take an equity stake in the cultivator.”
Rob Wilhoit of Sara Bay Real Estate Inc. is representing the Manatee property for future lease or sale. He says the property is available for sale on an informal basis for $5.25 million. The current ownership team also is willing to consider a lease that would tie up at least 80 percent of the space, Wilhoit said. Beyond betting on the outcome of the November vote in Florida on legalizing medical marijuana, there is risk in whether a property and a company’s approach will fit in with whatever regulations that the state adopts afterward, and also on local zoning regulations.
But Cannabis-Rx chief executive Llorn Kylo seems fairly confident in his most recent deal. “Given the current push to legalize and regulate medicinal marijuana in Florida, we believe this well-located property would serve as an ideal location for a licensed grow facility and/or distribution center,” Kylo said in a statement. “Regardless of what happens in the state, we are confident in our ability to maximize the value of the asset.”
The property is just one of dozens that Kylo, 39, has been considering for purchase. The pot entrepreneur has raised $30 million for the effort. Cannabis-Rx bills itself as focused on providing cannabis-based businesses with capital and real estate to enhance their growth through buildings that can be used for growing, processing and distributing marijuana.
The company said it also helps businesses with regulatory compliance, license applications and grow-operation consulting service, and that it will consider investing in retail properties and offering start-up and operating capital to businesses.
In all, Cannabis-Rx — formed when Longview Real Estate changed its name in January — owns 35 properties in Florida, Illinois, California and Washington, according to the company’s website.
A story this week in the Puget Sound Business Journal described Kylo as “a modern-day prospector whose experience shows how white-hot the business of legal marijuana is.”
He told the publication that competition has been fierce. He described a recent situation where the owner of a 100,000-square-foot warehouse in an area of Colorado where cannabis can be grown decided to sell. The ceilings of the building were tall enough to allow two decks of plants.
“It was a gem,” Kylo said.
He flew in to look at the property, but found out that there already were four offers on the property and passed on entering the fray.
The business journal reported that Kylo was looking at eight commercial buildings in Seattle this week.
The company’s Manatee County purchase differed from Cannabis-Rx’s typical acquisition strategy, which involves buildings from 10,000 square feet to 100,000 square feet.
“We see the legalization of marijuana as potentially the birth of a large new industry in America,” the company says on its website. “In our experience emerging industries with strong sector tailwinds offer many opportunities for high risk-adjusted returns.”
You must be logged in to post a comment.