A California company is fronting the costs for a medical marijuana cultivation facility expected to open in Holliston within the year.
Innovative Industrial Properties bought the $3 million address at 465 Hopping Brook Road, in the Hopping Brook industrial park off Rte. 16 last week. The company will lease the property back to PharmaCann for an annualized aggregate base rent of about $2.6 million, PharmaCann Public and Regulatory Affairs Director Jeremy Unruh said.
Innovative Industrial Properties will also finance the cost of building the grow facility, expected to be 58,000 square feet.
“They purchased the dirt, meaning the property, and then they will, in effect, front the construction costs, and we will lease the property from them,” Unruh said.
The lease will last a little more than 15 years, with opportunities to extend.
This is what the San Diego company does, according to their website. Innovative Industrial Properties owns at least six other places in five states, leased to state-licensed medical marijuana companies. The Hopping Brook Road facility is the second leased to PharmaCann, with the first in New York.
“It’ll be a state-of-the-art greenhouse facility, a climate-controlled greenhouse,” Unruh said. “This will be our fourth cultivation center that our company has developed.”
PharmaCann has two cultivation centers in Illinois and one in New York. The company also opened its ninth dispensary in the United States in Wareham last week.
Such deals are the workaround cannabis companies have turned to in lieu of bank loans, particularly when looking to finance multimillion dollar operations. Cannabis is still federally illegal, and federally-insured banks are extremely cautious when dealing with businesses associated with the drug.
“Construction loans are not really available to operators like PharmaCann in the medical cannabis space,” Unruh said.
Some banks will offer rudimentary services, letting businesses secure their money and run payroll, but bigger loans are harder to come by.
“It works for us, because we are able to finance …. a large multimillion (dollar) project with a partner that is of institutional caliber,” Unruh said.
Unruh said he expects a temporary building to open in the next few months on Hopping Brook Road, with a permanent facility opening in the spring of 2019. The location could hire 20 to 40 employees, depending on market demands.
“We’re eager to be a good neighbor,” Unruh said, “and a meaningful contributor to the economy of the community.”
The deal with Innovative Industrial Properties has no bearing on agreements between PharmaCann and the town of Holliston. Innovative Industrial Properties bought the land from Jon Mark Delli Priscoli’s New Hopping Brook Realty Trust.