elevated up - loopnet

4300C West End Road | Arcata, California HUMBOLDT COUNTY

Elevated UPTurnkey Cannabis Manufacturing & Distribution Facility

Type 6, 7 and 11 Licenses

Arcata, California (Humboldt County)


PREPARED BY:

CHAD DIXONSenior Associate

Retail Investments Lic. #02053108

[email protected]

MICHELLE SCHIERBERL Senior Vice President

Retail InvestmentsLic. #01000058

[email protected]

DONALD ELLISSenior Vice President


[email protected]

STREAM REALTY PARTNERSGreater Los Angeles

3161 Michelson Drive, Suite 100Irvine, CA 92612T 949.203.3030

TABLE OF CONTENTS1. Executive Summary

2. Investment Highlights

3. Licenses

4. Capital Invested

5. Cannabis Industry Overview

6. Humboldt County Overview

7. Lease Abstract

2


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 license now before the state agencies for approval of the annual license. This brand new facility 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 past four years, you will save four-to-five years in licensing, entitlements, and building to code. All equipment is included in the sale.

The buildout is designed for extraction, processing, cold storage, lab space, and distribution. 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.

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 per day, 7 days a week. Manufacturing licenses may be have reached the limit for this area and as a result the offering is extremely rare and one-of-a-kind.

Humboldt County is part of the largest cannabis-producing region in the United States. It has been on the forefront of marijuana since the 1970s as the climate is especially conducive to 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 of origin” labeling, guaranteeing quality across the supply chain. California law protects this 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.

THE OFFERING

FINDER’S FEE AVAILABLE!

4300C WEST END ROADARCATA, CA 95521 (HUMBOLDT COUNTY)

DOMAIN NAMES: 10 Total, including DesignerDrugs.com

BUSINESS TYPE:Manufacturing and Distribution

LICENSES:Type 6, Type 7, and Type 11

MONTHLY RENT:$5,628 (CPI or 3% annual increases)

LEASE TERM:Through 2026 (with 5-Year option)

LEASE TYPE:NNN

SIZE OF BUILDING: 2,905 SF

POWER:800 Amps, 240v – 600v

ZONING:Cannabis Innovation Zone

SECURITY:Extensive (Wired cameras and 24-hour onsite security)

LEASE OR OWN:Lease

FF&E:Included in Sale (Turnkey Offering)

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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 TRIANGLEThe 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 OPERATIONSThe 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 PRODUCTSYour 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.

INVESTMENT HIGHLIGHTS

4


SYNERGIES WITH DISTRIBUTION LICENSEWith 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 ZONEElevated 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 CALIFORNIAThe 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” POTENTIALThe 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.

INVESTMENT HIGHLIGHTS

5


TOTAL INVESTMENT

CONSTRUCTION $510,000

LEGAL-THIRD PARTIES $70,000

LEGAL-COMPLIANCE IN HOUSE $350,000

CONSTRUCTION MANAGER-ARCHITECH $524,000

EQUIPMENT $360,000

SECURITY SYSTEM $40,000

CORPORATE TAXES, CPA, FILING FEES WITH STATE $38,000

PERMIT FEES $40,000

UTILITIES INTERNET AND PHONE $19,000

TRANSPORTATION $51,000

STORAGE $22,000

DOMAIN NAME AND RELATED NAMES $15,000

RENT (48 MONTHS) $262,000

TOTAL COSTS $2,301,000

TOTAL INVESTMENT:Expenses since beginning the licensing process. Expenses are rounded to the nearest thousand.

• Extraction using “Volatile” substances, such as butane, propane, and hexane

• Much more stringent because using highly flammable substances

• Closed-loop extraction system

• Certified by licensed California engineer

• Approved by local fire code official

• Extraction solvents must be food-grade

• Hydrocarbon-based solvents must be at least 99% purity

• Much more costly than Type 6 license

• Much more efficient manufacturing process

• Elevated Up has both medicinal and adult-use licenses

TYPE 7 LICENSELEVEL 2 MANUFACTURINGVOLATILE MANUFACTURING

TYPE 6 LICENSELEVEL 1 MANUFACTURINGNON-VOLATILE MANUFACTURING

• Extraction using “Non-volatile” substances, such as CO2, water, oils, or butter

• Less stringent than Type 7 regulations

• Elevated Up has both medicinal and adult-use licenses

• Transporting cannabis goods between licenses, arranging testing of goods, and conducting the quality assurance review to ensure compliance with all packaging and labeling requirements

TYPE 11 LICENSEDISTRIBUTION

6

4300C West End Road | Arcata, California HUMBOLDT COUNTY7


PROPERTY DESCRIPTIONADDRESS: 4300 West End Road, Unit C

Arcata, California (Humboldt County)

SIZE OF BUILDING: 2,905 SF (room for expansion)

SIZE OF LAND: 5,000 SF (Room for stackable 12x40 Refrigerated Containers, already hooked up)

LOADING DOCKS: Two

ENTRANCES: Two (Distribution & Manufacturing)

SECURITY: Wired security cameras and 24-hour armed 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 ROOMS: Three (Volatile, Non-Volatile, Mixed Use)

PACKAGING ROOMS: Two (with vaulted ceiling dedicated to packaging)

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)

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https://www.codepublishing.com/CA/Arcata/#!/LUC/ArcataLUC0920/ArcataLUC0928.html


EQUIPMENT

C1D1 HAL EXTRACTION POD (VOLATILE USE)

• Focus on safety (UL Certified)

• “One-size fits most”

• 20 Amp, 240 Volt (single-phase input)

APECKS SUPERCRITICAL CO2 EXTRACTION MODULE(NON-VOLATILE USE)

• Focus on safety (UL Certified)

• 20 Liter vessel

• Fully automated, closed loop system (recovers 95% of CO2)

• Quietly processes 25-31 pounds of cannabis in 24 hours

MASTER BILT SUB-ZERO WALK-IN FREEZER

• Energy efficiency (polyurethane has great temperature-retaining properties)

• Superior moisture resistance

• Maximum walk-in storage space due to thinner walls

• Dead-bolt locking available

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1-TYPE 6 LIMITED ACCESS AREAApex CO2 Extractor Equipment

4-TYPE 7 LIMITED ACCESS AREA

16 TREDS @ 11"

5-TYPE 6 & 7 LIMITED ACCESS AREA

Secondary Processing

FREEZER

10-PRODUCT STORAGE

9 - LIMITEDACCESS COMPOST WASTE MANAGEMENTAREA TYPE 6&7

3-SECURED ACCESS COM AREA

MON

17 RISERS @ 65" EA.8

AA5.1

First Floor, Manufacturing Premises

Roll up door

Nonvolatile Extraction Activities

C1-D1Booth

Loading and Unloading

First Floor:

= Distribution Premises

All other first floor area besides bathroom = Manufacturing Premises

1ST FLOOR DRAWINGS

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OPEN TO

PRODUCT INTAKEOFFICE & BATCH SAMPLING

DN

BELOW

labeling

PACKAGING7 - TYPE 6&7 A&M PACKAGING AREA

SINK

STORAGEMECH

Security Storage

OFFICE

17 RISERS @ 65" EA.816 TREDS @ 11"

4X12 HDR

OPEN TO BELOW

2- 13/4 X 9-1/2"MICROLAM

2- 13/4 X 9-1/2"MICROLAM

SECOND FLOOR PLAN REVISEDSTAIR SECTION A-A

AA5.1

4X4

HD

R

4X4

HD

R4X

4H

DR4X

6H

DR

packagingpre-roll manufacturing

secure storage for batch sampling insecure cage

FRAMING PLAN REVISED

ALL OF SECOND FLOOR IS DISTRIBUTION PREMISES

Second Floor, Elevated Up Distribution Premises

2ND FLOOR DRAWINGS

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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, CALIFORNIA (HUMBOLDT COUNTY)

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 land in Northwestern California. The city has a total area of 11 square miles, of which 9.1 square miles is land 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 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.

ARCATA

REDDINGEUREKA

SACRAMENTONAPA

SAN FRANCISCO

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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 (MM)

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

-150 -140 -140 -81 -38 -18 -5.1 -7.6 -20 -64 -140 -190 -993.7

AVG. SNOWFALL INCHES (CM)

0 0.1 0 0 0 0 0 0 0 0 0 0.1 0.2

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

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

13


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.

CANNABIS INDUSTRY OVERVIEW

14


EMERALD FAMILY FARMS

EMERALD TRIANGLE (HUMBOLDT, TRINITY, AND MENDOCINO COUNTY)

SISU

PARK & BARLEY

ROYAL KEY CONCENTRATES

HUMBOLDT COUNTY INDOORS

BEAR EXTRACTION HOUSE (WOX, URSA)

EEL RIVER ORGANICS

ARCATA X

UPNORTH HUMBOLDT

EMERALD FAMILY FARMS

TRUE HUMBOLDT

ELEVATED UP

LEVEL ONE MANUFACTURERS(NON-VOLATILE)40 LEVEL TWO

MANUFACTURERS(VOLATILE)22

2,765 LICENSED CULTIVATORS 196 LICENSED

CULTIVATORS 45 LICENSED RETAILERS 5 LICENSED

NON-STOREFRONT RETAILERS (DELIVERY)

15

ELEVATED UPTALKING TREES FARMS


LEASE ABSTRACT

RENT ADJUSTMENT LEASE TERM MONTHLY RENT YEARLY RENT

Sept. 2016 $5,000 $60,000

Greater of 3% or CPI Sept. 2017 $5,150 $61,800

(Assuming 3% Annual) Sept. 2018 $5,305 $63,654

Sept. 2019 $5,464 $65,564

Sept. 2020 $5,628 $67,531

Sept. 2021 $5,796 $69,556

Sept. 2022 $5,970 $71,643

Sept. 2023 $6,149 $73,792

Sept. 2024 $6,334 $76,006

Sept. 2025 $6,524 $78,286

Sept. 2026 $6,720 $80,635

OPTION TERM

Sept. 2027 $7,500 $90,000

Annual Increases Greater of 3% or CPI

PREMISES:4300C West End RoadArcata, CA 95521

USE:Marijuana, processing, warehousing, research, testing, and new marijuana product development.

BASE TERM: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 annum.

LEASE TYPE:NNN

RENT COMMENCEMENT:September 2016

UTILITIES:Tenant shall be responsible for all metered utilities.

INSURANCE:Property Insurance: Tenant shall carry property damage insurance to cover cost of property.Liability Insurance: Tenant shall carry liability insurance of $1,000,000.

REAL ESTATE TAXES:Tenant shall be responsible for its own personal property tax.

REPAIRS AND MAINTENANCE:Tenant, at tenant’s sole cost and expense, shall be responsible for any alterations made to the premises. Landlord shall be responsible for roof, siding, water, sewer, sprinklers and removal of debris. 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.

LANDLORD:Dolly Yarden Industrial Park, LLC

TENANT:Elevated Up, a California Mutual Benefit Corporation dba Humboldt Elevated

17


PREPARED BY:

CHAD DIXONSenior Associate

Retail Investments Lic. #02053108

[email protected]

MICHELLE SCHIERBERL Senior Vice President


[email protected]

DONALD ELLISSenior Vice President


[email protected]

STREAM REALTY PARTNERSGreater Los Angeles

3161 Michelson Drive, Suite 100Irvine, CA 92612

949.203.3030

CONFIDENTIALITY AND DISCLAIMER

The information contained in this offering memorandum is furnished solely for the purpose of review by a prospective buyer

of the business (“Business”) and is not to be used for any other purpose or made available to any other person without the

express written consent of Stream Realty Partners. The information contained in this package is from sources deemed reliable

but is not guaranteed by Stream Realty Partners in any way and is subject to change in corrections, errors and omissions or

withdrawal without notice. All information is presented “as is” without representation or warranty of any kind. Such information

includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and

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

with independent legal and financial advisors, and carefully investigate the economics of this transaction and Business’s suitability

for your needs.

Summaries of any documents are not intended to be comprehensive or all-inclusive, but rather a general outline of the pertinent

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

and the existence of any potentially hazardous material used in the construction or maintenance of the Business or located at the

site.

ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK.

No copies of this package may be made in whole or in part without the prior written consent of Stream Realty Partners. This

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

have any legal commitment or obligation except as set forth in a fully executed, definitive sale agreement delivered by the Owner.

Photos herein are the property of their respective owners. Use of these images without the express written consent of the owner

is prohibited. Stream and the Stream logo are service marks of Stream Realty Partners, L.P. and Stream Realty Partners-orange

County, L.P. All other marks displayed on this document are the property of their respective owners.

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