High Hampton Helps Growers Navigate a Complex Market, Plus Exclusive Video Interview


Ryan Allway

April 12th, 2018

Exclusive, Feature Stories, News


The cannabis industry is projected to reach $50 billion by 2026, according to Cowen & Co., driven by the legalization of adult-use and medical cannabis across a growing number of states. The passage of Proposition 64 in California created one of the largest legal markets in the world, but many smaller growers under Proposition 215 have struggled to keep up with the new policies, while even larger companies continue to face issues at the federal level.

High Hampton Holdings Corp. (CSE: HC) (OTC: HHPHF) (0HCN.F) CEO David E. Argudo has worked on cannabis policy at the local and state levels, as well as internationally in Germany and Columbia. After becoming an elected official in 2009, his first order of business was a dispensary ordinance in his local community. Six months later he became mayor and wrote a letter in favor of taxation – one of the first of its kind back in 2010.

CFN Media recently sat down with Mr. Argudo to discuss the evolution of cannabis policy, how it affects existing growers, and how the company is positioned in the market.

 

California’s Massive Potential

California passed Proposition 215, or the Compassionate Use Act, permitting the use of medical cannabis back in 1996. Qualified patients and caregivers were permitted to possess up to eight ounces of dried marijuana, as long as they possessed a state-issued identification card. Over the ensuing 20+ years, the industry evolved to include many non-profit collectives that grew medical marijuana at scale for patients throughout the state.

In 2016, California passed Proposition 64, or the California Marijuana Legalization Initiative, which aims to create a legalization framework for recreational and medical cannabis. Under these rules, anyone aged 21 or older is permitted to possess and use recreational cannabis. The measure also created two new taxes – on cultivation and retail – and created the basis for statewide and municipal rules governing the production and sale of the drug.

BDS Analytics expects California’s cannabis industry to hit $3.7 billion in 2018 and grow to $5.1 billion in 2019 as more dispensaries come online. As the world’s sixth largest economy, the state is expected to become the single largest cannabis market in the world. Northern California has been the most progressive when it comes to cannabis legalization, but Southern California is quickly catching up and opening up.

The challenge is that many existing growers are finding themselves unprepared for the new framework created by Proposition 64. While they are experienced at growing, many of them lack the expertise in navigating the regulatory requirements of both the state and local authorities, as well as the financial resources necessary to scale up demand and ultimately become successful in a rapidly changing marketplace.

Federal Changes on the Way

Attorney General Jeff Sessions rescinded the Cole Memo back in January, which introduced a lot of uncertainty into the market. In essence, the move put the authority back into the deputy attorney generals’ hands when it comes to cannabis enforcement. Mr. Argudo believes that the move created a lot of noise that spooked investors, but in reality, there’s not much behind the move as most deputy attorney generals recognize the industry’s evolution.

Nearly 20 attorney generals from states with recreational and medical cannabis wrote a letter to Congress in January asking for help with financial regulations. In the letter, the AGs indicated that the grey market made revenue more difficult to track for tax purposes and contributed to a public safety threat as cash intensive businesses are often targets for criminal activity. They requested safe harbor for depository institutions that finance the cannabis industry.

There are also more than 20 other bills in Congress requesting various forms of cannabis legalization and support on a national level. For example, the Marijuana Justice Act seeks to remove medical marijuana from the Controlled Substances List and provide restorative justice to communities disproportionately affected by marijuana arrests and convictions. Bills like these go beyond simple banking issues and address other systemic issues.

Mr. Argudo believes that there is unlikely to be a meaningful change over the next year, but there continues to be real progress in opening up conversations. Just a few years ago, these conversations wouldn’t have even been possible at higher levels of government.

Helping Growers Succeed

High Hampton Holdings Corp. (CSE: HC) (OTC: HHPHF) aims to help experienced growers come into line with the new regulations created by Proposition 64 and ultimately scale their operations into new markets.

The cultivation of cannabis in California requires municipal and state permits to operate, as of January 1, 2018, and many current growers do not meet the standards for these certifications. The state has become increasingly aggressive in shutting down non-compliant operations, while the supply of zoned and permitted areas to cultivate are in high demand. Many experienced growers are losing out to large institutional growers as a result.

High Hampton’s 100% owned CoachellaGro asset is a 10.8 acre property located in the Coachella Cannabis Zone. The company’s management team anticipates receiving a conditional use permit over the near-term, begin construction of the cultivation facilities this year, and begin cultivation as early as the fourth quarter of this year. By working with existing growers, the company aims to capitalize on an existing customers base and help local communities.
For more information, visit the company’s website or download their investor presentation.

Disclaimer

The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/

Ryan Allway

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.


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CFN launched in June of 2013 to initially serve the growing universe of publicly traded marijuana companies across North America. Today, CFN Media is also the digital media choice for the emerging brands in the space.

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