by Lynda Kiernan

ColorPoint, the sixth largest commercial greenhouse operation in the U.S., announced it is transitioning to a hemp-only company and is merging operations with vertically integrated hemp company AgTech Scientific to become a leader in indoor/outdoor hemp production and products. 

Founded in 2015 by a small group of Canadians, AgTech Scientific began as a pet-food research project, but transitioned to a hemp company and moved to Kentucky in early 2017, where the company grew more than 80 acres of hemp the following year, and broke ground on a 50,000 square-foot manufacturing and extraction facility. 

The two companies first became acquainted in 2017, and later partnered on the production of clones for the 2019 outdoor farming season. Later, in 2018, after a successful beta test on indoor-grown hemp, the two companies forged a supply agreement that included agricultural processing, clones, and indoor production during the summer season. 

Then, after years of researching alternative crops, ColorPoint approached AgTech Scientific earlier this year about advancing their business relationship, and the two companies decided the best course of action would be to merge their operations, and transition all greenhouse assets to premium hemp production and products. 

“The announcement today is the big next step for the hemp industry,” said Jessica Scott, director of communications, AgTech Scientific. “AgTech and ColorPoint are committed to their people, appreciated by everyone, especially farmers. I have been in the industry for numerous years and I am more excited about the future today than ever before.”

The new entity’s indoor facility and greenhouse operations, which will grow hemp 24 hours per day/365 days per year and have the capacity to produce more than 200,000 cuttings per day, will include:

~ An 1,837,847 square-foot greenhouse including 145,182 square feet of production and shipping facilities

~ Modern, high-tech  greenhouse with full concrete floors, ebb and flood floor system, and operational roof

~ Agricultural processing center with the capacity for drying, stripping and milling more than 100,000 plants per day

~ Experienced management team with 113 full-time employees and over 340 workers at peak season

~ Fully computerized root to shelf tracking

~ More than 100 tractor trailers with an experienced logistics team

The outdoor farming operation, spanning more than 1,500 acres within 15 miles of the indoor greenhouse facility:

~ Will plant more than 5 million clones in 2019

~ Will produce a CBD crop with high yields based on past performance

~ Farmers will shoulder less risk and greater opportunity with guaranteed payouts throughout the season

~ Detailed SOP program to ensure compliance and consistency with farm coordinators and managers in the field

~ Fleet of more than 100 trailers (many refrigerated) to ensure timely logistics during the planting and harvest season

Meanwhile, the 50,000 square-foot extraction and manufacturing facility -which was engineered and developed by a team of experienced industry professionals, and saw a groundbreaking in October 2018 on 10 acres of industrial land – is 15 minutes from the indoor greenhouse facility:

~ Built to GMP standards

~ Is expected to open in August of this year

~ Will use ethanol-based extraction, with original biomass input of 2000 pounds per day, and scaling up to 14,000 pounds per day by the second quarter of 2020

~ Continuous production 24/7 – 365 days a year

~ And was partially funded through local and state grants

Partnering Amid Potential 

By removing hemp from the list of controlled substances and legalizing its production, the 2018 $867 million Farm Bill was the catalyst to turn what has been a boutique activity since 1937 when the Marihuana Tax Act of 1937 made the possession of cannabis and hemp illegal, into a business that has the potential to generate revenues of more than $20 billion per year by 2020.

Hemp is currently used in the production of more than 25,000 products worldwide including food, beverages, textiles, furniture, automotive parts, beauty products, and building supplies. And as demand wanes for tobacco and dairy, trade tensions cut into global markets for U.S. goods, and climate change shifts production maps, the potential that the legalization of hemp  poses for U.S. farmers, processors, and investors is significant.

And recent deals indicate that similar to ColorPoint and AgTech Scientific,  players looking to maneuver as leaders in this new production class are doing so through partnerships. 

In March of this year Village Farms International announced it is partnering with Nature Crisp, a private, large-scale farming operation and part of the Jennings agricultural group of companies, to launch a joint venture for the outdoor cultivation of high-cannabidiol (CBD) hemp and CBD extraction in multiple states throughout the U.S.

Going by the name Village Fields Hemp, the venture will be 65 percent owned by Village Farms, and 35 percent owned by Nature Crisp. Currently Village Fields is scouting locations for its U.S. cultivation, which is expected to reach between 500 and 1,000 acres this year, with planting beginning this spring.  

And just last week, CannTrust, a licensed Canadian producer of medical and recreational cannabis, announced it is establishing U.S. production operations via a joint venture with the Elk Grove Farming Company.

After building a Canadian patient bank of 72,000 individuals, CannTrust has signed a letter of intent with diversified farming company Elk Grove Farming that will give the company access to more than 3,000 acres in California for hemp production. Under the terms of the agreement, each party will hold 50 percent of the resulting new entity.

“Today is a great day for the company, our employees and our families,” said Art VanWingerden, co-president, ColorPoint. “The strength of our unique approach and partnership with local farmers, combined with our indoor grow capabilities and our vertical extraction integration, places ColorPoint and AgTech in position to take a leadership role in the emerging U.S. hemp industry.”

 

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.