After a marijuana penny stock startup bought a California ghost town with the goal of turning it into a pot tourism destination, the company ran out of money to develop the project.
Last August, Business Insider reported that American Green, a marijuana-focused technology company and consultancy, purchased the unincorporated town of Nipton, California, for close to $5 million. The company reimagined the town (population: 20) as a marijuana production hub where visitors might tour farms, shop dispensaries, and stay at a “bud and breakfast” inn.
American Green issued a press release on March 15 revealing that it had sold the town of Nipton to another penny stock, Delta International Oil & Gas, a company that buys land for exploratory drilling, for more than $7.7 million. American Green will continue to develop the project over the next five years, though critics are skeptical that the new buyer can finance it.
The price includes the assumption of $3.73 million in American Green’s debt. American Green will be paid for the town, in part, by the exchange of $4 million in Delta Series A stock.
Marijuana industry blog New Cannabis Ventures first reported the sale.
Founded in 1998, American Green calls itself the second-oldest publicly-traded cannabis company in the US, with over 50,000 shareholders. It sells shares of the company through an over-the-counter listing — a type of security that trades on an exchange dedicated to small companies.
The company has been vague about what products and services it provides, though it says it’s “participated in nearly all facets of the cannabis market,” from cultivation to manufacturing to retail. In 2017, American Green introduced a vending machine called ZaZZZ that dispenses marijuana, but a company spokesperson would not say how many machines are in operation. American Green also has an online store for selling products made from industrial hemp plants.
American Green was virtually unknown until its purchase of Nipton last summer.
Located on the edge of the Mojave Desert, Nipton was once a booming mining town. For many years, Nipton’s most successful business was a convenience store that sold lottery tickets to people visiting from Nevada. The trading post was the closest California State Lottery retailer to Las Vegas.
American Green saw an opportunity to turn the near-ghost town into a marijuana tourism destination. The company bought all 120 acres, structures, and a working solar farm in the deal.
Stephen Shearin, consultant to American Green and general manager of the Nipton project, told Business Insider last year that the company aimed to “create a community that is accepting and understanding” of the use of marijuana, which is an illegal substance under federal law.
“The [idea] here isn’t to create ‘Woodstock 2017,'” Shearin said. “It’s about creating an environment where people come to work and share in a community.”
According to New Cannabis Ventures, the company’s sale supports a theory that American Green couldn’t actually afford to buy the town or develop the project in the first place.
American Green is not giving up on Nipton entirely. A company statement said that it will manage the project, now owned and financed by Delta International Oil & Gas, over the next five years.
David Gwyther, chairman of American Green, described the situation as a “win-win.”
“American Green can now expend less of its energy on capital raising, and focus on implementing the revenue-generating components of Nipton, and its other investments, along with many new, and exciting projects on the horizon,” Gwyther said in a statement.