Cannabis Shortage Combatted by GrowLife GIFT
NEW YORK ( MainStreet) The GrowLife Infrastructure Funding and Technology (GIFT) program completed its first transaction with L.E.A.F. Aspen, providing equipment to the Colorado medicinal pot dispensary in exchange for monthly payments.
"The program that we offer is for selective clients in certain states to accelerate growth in the legal cannabis industry," said Sterling Scott, CEO of GrowLife in Woodland Hills, Calif. . "Our objective with the program is to increase scale, market penetration, revenue and earnings for GrowLife."
Through GIFT, growers can acquire and pay for equipment over time.
"We expect these transactions to be in the range of $500,000 to $5 million but that will vary depending on the company and on the yearly terms of the arrangement, which can be from one to 5 years," Scott said.
L.E.A.F. Aspen's transaction involved Articulated Investors, a real estate investment company in New York.
"Articulated Investors purchased a commercial building in Aspen, Colorado and they are leasing that building to the team at L.E.A.F. Aspen," Scott told MainStreet. "Before companies like Articulated Investors are prepared to go forward with real estate acquisitions they want to be confident that leasees, such as L.E.A.F. Aspen, will service the lease with agreed upon payments."
Currently, GrowLife (PHOT) is considering 10 to 20 other GIFT transactions with various legal cannabis related companies.
"It's a great way for cannabis companies and especially start ups to get into the industry," said Darrin C. Duber-Smith, marketing professor with Metropolitan State University in Denver. "It's simply smart marketing on the part of GrowLife because the state of Colorado is wide open to these alliances right now. It's also a good opportunity to make money at least in the short term and building goodwill in the industry isn't a bad idea either."
The GIFT program was launched on the heels of an emerging shortage of legal cannabis in Colorado, which is partly a result of a state requirement that the nearly 20 dispensaries of legal cannabis in Denver grow 70% of the amount they sell.
"The availability of legal cannabis is a lot lower than market demand and there is a substantial amount of expansion of infrastructure occurring in Colorado and beginning in Washington state to accommodate demand," Scott said. "It's our expectation that this pattern of supply and demand for legal cannabis will be played out all across the country."
Although dispensary owners in Colorado who hold an Optional Premise Cultivation License (OPCL) are permitted to build grow facilities, Scott anticipates rolling out the GIFT program nationwide to assists growers and dispensaries who need help on the capital side by offering multi-year supply relationships.
"The benefit for GrowLife is we end up with an exclusive relationship with L.E.A.F. Aspen for as long as five years for all of their infrastructure and expendables because grow operations require a lot of specialized equipment to operate their cannabis business and successfully accomplish the growth of cannabis plants for various genetics," said Scott.