Seedsman Blog

Warren Buffet Subsidiary Company Looking At Cannabis Business Models

Legendary investment trendsetter Warren Buffet appears to have shown an interest in a particular part of the new American green rush.  As a result, his investment company,  Berkshire Hathaway has moved into some interesting new space this year.

Never shy about investigating new avenues for investment and high return, Buffet himself has shown interest in unusual stocks and verticals for a long time.  His interest in commodities has been evident even more recently with investments in consumable products as the American food chain has shown increasing fragility in the last two years.

Now a company called Cubic Designs, Inc., associated with the Buffet Conglomerate, and which designs workspaces in the interiors of commercial warehouses, is exploring the cannabusiness growth space.

In September, the company sent out over 1,000 letters to dispensaries (mostly in Colorado, California and Washington State) offering to help such companies drastically increase their growing space.  Because growers are also harder to reach, Cubic also targeted dispensary owners, hoping to be introduced to growers this way.

Warehouse space for urban cannabis farming is starting to become a rare commodity in places where such grows are legal.  Formerly industrial spaces and areas of cities are the current industry favourites.   In places like Denver, for example, in a state where indoor grow operations have really bloomed this year if not fundamentally changed the equation in terms of providing a weather risk free, year round crop, such space is at a premium now.

It is just another sign in a very strange if not watershed year, that the stigma attached to businesses directly handling the plant is also beginning to fade after what is about to become a full year of recreational legalization in Colorado.

Indoor growing offers several different advantages from traditionally outgrown crops.  Apart from being able to create artificial grow seasons, the crops grown indoors are purer, often stronger, and free of other contaminants including spores from other types of plants.  Medical and conneussier use, therefore, has also started to focus on the indoor market.

The Western drought situation has also impacted the growth of this new type of alternative, highly managed, often highly technical farming as well as federal regulations which this year, in places like Washington State and California, have been specifically enforced against marijuana farmers.  Indoor grows do not use federal water from reservoirs and aquifers but rather city and municipal water sources.  They also tend to use less water than outdoor crops (by a factor of as much as 50%).

The interest by a Buffet related company in what is clearly a high growth area that backs into far more “traditional” investment interests (like managed corporate real estate) is also not exactly cutting edge this year.  Several large firms both in the United States and Canada, in particular, have closed deals with investment partners in the six to seven figures this year in this arena.

And it does not take a Warren Buffet clone to realize that this entire market is still in the stages of hyper growth and therefore primed for a professional investor with deep pockets and access to credit facilities (for one) to make a new green mark.

Nevertheless, the fact that a Buffet related company would send such an interesting if not public signal of its intent if not interest is one more sign that the industry, such as it already is, is becoming not only more respectable, but priming the pump to take off as a fully legitimate, federally recognized vertical even perhaps by the next Presidential election in 2016.

by Marguerite Arnold

 

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