Glass House secures loan of up to $100M to retrofit Camarillo greenhouses for cannabis
A few months after purchasing the Houweling’s Tomatoes property in Camarillo, cannabis grower Glass House Group has secured the funding necessary to upgrade the greenhouse facility.
Glass House announced Dec. 13 it has acquired a senior secured term loan agreement with a U.S.-based private credit investment fund for up to $100 million, with an initial draw of $50 million.
Glass House completed its purchase of the Camarillo facility in September for $93 million in cash, as well as stock considerations.
After the $50 million initial draw, further loans of $25 million will be made upon the completion of certain conditions, Glass House said. The loans will be repayable on Dec. 1, 2023 and will carry a variable interest rate of 10%-12% annually.
As part of the deal, Glass House will issue 2 million new warrants to the lender, with each warrant exercisable to acquire a Glass House share until June 2026.
Graham Farrar, president of Glass House, told the Business Times the loan will be used to “retrofit the facilities to make it an ideal place to grow cannabis” and cover “the startup costs” to convert the greenhouses to cannabis, including hiring people and upgrading the property’s security.
“It takes about six months from a plant going in, to $1 in the bank account, so six months of heavy investment has to be funded,” Farrar said.
He said Glass House hopes to have cannabis operations ready to grow by the end of the first half of 2022.
The Camarillo property has six greenhouses that total 5.5 million square feet. Glass House has previously announced that after the first phase of its conversion, the property is expected to produce more than 180,000 dry pounds of sellable cannabis per year, an increase of more than 300% from the company’s current growing capacity.
Glass House currently grows cannabis at two farms in Santa Barbara County and also owns four dispensaries in California, including the Farmacy in Santa Barbara. The company headquarters is in Long Beach.
Glass House trades on a Canadian stock exchange, after going public earlier this year via a merger with a special purpose acquisition company.
Shares of the company closed at $3.95 on Dec. 14, down 4.4% from the day before. Glass House shares are down 30% since September.
Farrar said the company aims to have more than 400 employees at the Camarillo site. Many will be former employees of Houweling’s Tomatoes, which laid off 486 people in August, before it sold the property to Glass House.
For now, Glass House plans to grow both cannabis and vegetables on the property. At first, two of the six greenhouses will be converted for cannabis, while the other four grow tomatoes and cucumbers.
“We want to end up expanding our cannabis growing operations, but that can’t happen with the snap of a finger,” Farrar said. “So we wanted to get the first third of it running and get our feet under us, and once we get the formula set we could expand to the rest of the greenhouses.”
Because cannabis still isn’t federally legal and Glass House cannot operate across state lines, Farrar said the company doesn’t want to “swamp the market” in California.
“Our expectation and my belief is that we will see federal legalization and the walls will come down,” Farrar said. “Then we’ll be selling cannabis out of Camarillo to the rest of the country, bringing the rest of the country’s dollars for tax revenues for Ventura County, which everybody that lives out there should be excited about, but that’s still a couple of years away.”