Herzl Capital has begun actively applying its real estate expertise to the emerging cannibals market, and in particular, to cannabis cultivation.
Cannabis cultivation is primarily a real estate investment combined with agriculture development.
Cannabis – the Plant
Cannabis is a plant, also known as “Marijuana”, “Weed”, “Grass”, etc.
It is often consumed by smoking or vaporizing the female plant’s flowers, and can be processed into an oil and then consumed in an edible form.
Cannabis contains over 113 unique molecules known as Cannabinoids.
The most famous cannabinoids are THC, followed by CBD and CBG; discovered by Israeli professor Rafi Mechoulam.
Market Expansion: After recent elections in the US, Cannabis is now legal in 36 states and the District of Columbia in some form (or decriminalized).
Legal sales in the US reached $7.1 billion in 2016 and are expected to surpass $23 billion by 2020; $36 billion if legalized on a federal level.
California - The cannabis industry in California alone is projected to grow to $6.6 billion by 2020 (California will allow recreational use starting in 2018 – currently, only medical use is legal).
$50 billion is the total for US sales IF black market sales are included. For comparison, the total markets for beer, tobacco, wine and chocolate are: $100B, $40B, $40B and $20B, respectively.
Nationally, roughly 21 million Americans use marijuana monthly or more frequently. Another 10 million do so on a less frequent basis. Across the country, support for marijuana legalization is rapidly outpacing opposition.
Cannabis is accessible in 36 states in the US, as well as a growing list of countries worldwide. Within these states, where cannabis is not legally accessible for recreational use, it is accessible for medicinal use.
Access to medical cannabis has become relatively easy in the US and other countries. In California for example, practically anyone can get a medical prescription via a portal like HelloMD.com, while in Israel, consumers must have a specific medical diagnosis to be eligible.
Cannabis is used to cure or treat a variety of neurological and nerve related conditions, including:
epilepsy, multiple sclerosis, cancer related pain, chemo induced nausea and vomiting, anorexia, Crohn’s disease, PTSD, glaucoma, HIV/AIDS, cachexia (wasting syndrome), muscle spasms, seizures, ALS (Lou Gehrig’s Disease), arthritis, Alzheimer’s disease, causalgia, dystonia, fibromyalgia, fibrous dysplasia, hepatitis C, hydromyelia, lupus, muscular dystrophy, neurofibromatosis, Parkinson’s disease, post-concussion syndrome, Tourette syndrome, traumatic brain injury, Lennox-Gestaut syndrome, Dravet syndrome, spastic quadriplegia, inflammatory bowel disease, and more.
Learn more about medical cannabis (20:00 minute video)
Investments in Cannabis Cultivation
A typical investment in a cannabis cultivation business is likely to provide 100% return of capital within 24 months.
Ongoing: We would expect to earn between 50-100% of the original investment each year thereafter.
Average wholesale price of indoor quality dried cannabis flowers ranges between $1000 - $2500 nationwide.
The majority of investment capital is used for:
Land acquisition, or rent.
Legal fees for licensing, or acquiring an existing license.
Fixed assets, such as greenhouses, lighting, irrigation, and air systems.
Cannabis Equity Holding Company
In 2017 we launched a Cannabis Equity Holding Company, to invest in cannabis cultivators, processors, and dispensaries in states where it is cannabis is legal for medical or recreational use.
The benefits of investing in a holding company include:
Increased Diversification of Operations
Access to greater quantity and quality of investment opportunities
Increased Scale of the Holding Company
Increases likelihood of buy-out from corporate or financial institution
Greater integration of resources and expertise, leading to;
Greater profit margins
Identify promising startups that show a high probability of getting to market in a measurable, predictable and brief time frame.
Target size of operations: 20,000 - 100,000 ft² (1850 - 9290 m²) and larger.
Invest in People: Any company we consider will have a quality management team, with operational experience in agriculture and cannabis, as well as advisors, consultants, and board of directors for each target operation.
Accretive follow on investments will be considered as portfolio companies reach pre-determined milestones.
The Holding Company will retain a shared resource of advisors including, grow consultants, attorneys and finance experts.
Sale to strategic buyers (Tobacco, Pharmaceuticals, Agriculture) or private equity firms.
All income will be reinvested in growing the companies (unless otherwise decided by the board of directors).
Invest in our cannabis investment Holdings
Herzl Capital invites accredited investors to join us as we select high quality new ventures in the global cannabis arena. This is a limited partnership that will invest in startups based that deal with medical and recreational cannabis.
If you are an entrepreneur seeking funding, please use this form as well.
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