Investment Opportunities

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Opportunity Overview

OMERAKI CAPITAL has created an opportunity to develop a progressive one-of-a-kind cannabis center in an ideal location in south Los Angeles County. In August 2018, an entity controlled by the company entered into a purchase agreement for 3.7 acres of flexibly zoned industrial property and in September 2018 received a master cannabis permit for manufacturing, distribution and testing activities on the site. The master cannabis permit is unique in that it offers the ability for quick, administrative approval of supplemental licenses for tenants in the center under a favorable city ordinance. A development agreement for the project with a highly attractive long-term tax rate in exchange for revenue guarantees has political support for passage and is currently being negotiated with city staff and attorneys.

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Los Angeles Area Industrial
Real Estate Market

The Los Angeles Area industrial sector is currently experiencing very favorable conditions for property owners and developers. According to a JLL research report, industrial vacancy at the end of 2017 was only 1.3%, average rents were $9.60 / sq. ft. and rising, demand is strong across various sectors (particularly e-commerce distribution) and supply is limited. The potential for further demand strengthening is strong, particularly for a cannabis permitted facility. In fact, one of the frequently cited areas of expected demand growth in the region is cannabis production, manufacturing and distribution.

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Cannabis Industry Connections

The project has the benefit of the experience of a leading cannabis industry veteran, Kenny Morrison (http://cannabismanufacturers.org/team/kenny-morrison/), the current president of the California Cannabis Manufacturers' Association (http://cannabismanufacturers.org/). He is also the founder and CEO of the Venice Cookie Company (https://vccbrands.com/), which has been in continuous operation in the medical cannabis products business for over 10 years. The Venice Cookie Company intends to move its corporate headquarters and manufacturing capability to the center as an anchor tenant and in partnership with the CCMA, the center will have relationships with top operators around the state and inside access to information about their strategic plans. Target tenants for the center will be identified from these relationships as well as opportunities for joint venture, collaboration or eventual consolidation.
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Shared Services Workplace

One of the motivating development principals for the project is based around a shared services model popular in other segments of the real estate market. The project will be designed to provide tenants with a menu of shared services from manufacturing, packaging, distribution, testing, security, warehousing, accounting and other business support services to choose from. Additionally, the center could be positioned from an innovation and technology angle to cultivate a progressive, cutting edge image.
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With regulation and industry forces driving consolidation, the short-term objective for the center is to create an environment for leading operators to survive and thrive and for new operators to have an opportunity to grow and develop. In the long-run, it could serve as a basis for a consolidator to roll-up operators.