Two Rivers Water & Farming (TURV) and their subsidiary (GrowCo) are in the final stages of completing their first high-tech, industrial-scale greenhouse for growing marijuana in Colorado. Using agricultural know-how and experience with logistics, they build modern, high-efficiency greenhouses that help cannabis farmers double their output at half the cost versus conventional warehouse growing operations.
Their first facility has a 91,000 sq ft greenhouse and 15,000 sq ft processing warehouse. When the second greenhouse is completed, GrowCo will have 180,000 square feet of grow space and a total of 360,000 square feet is expected in Colorado by the end of 2016. This will make GrowCo the largest operator of cannabis greenhouse facilities in the country.
Just today they announced that their partner Suncanna had their license to grow marijuana approved in Pueblo County, Colorado. This is a major step forward for GrowCo in terms of monthly revenues and cash flow. I expect a significant improvement to their financials beginning next quarter.
John McKowen, CEO of GrowCo, stated:
“GrowCo provides cannabis growers with the infrastructure and services to be the lowest cost, highest quality natural grower of cannabis in their state without GrowCo ‘touching the plant.’ We adjust the technological makeup of each greenhouse so that it’s perfectly suited to deal with the state’s climate. By organizing our greenhouse expansion into regions of the United States we can leverage our skillset with local greenhouse entrepreneurs to meet the needs of cannabis growers in states adopting cannabis laws.”
GrowCo’s parent company, Two Rivers Water & Farming (TURV), is the majority shareholder of GrowCo. Two Rivers combines high-value fruit and vegetable farming and wholesale water distribution into one company, utilizing a practice of rotational farm fallowing. Rotational farm fallowing, as it applies to water, is a best methods farm practice whereby portions of farm acreage are temporarily fallowed in cyclic rotation to give soil an opportunity to reconstitute itself. As a result of fallowing, an increment of irrigation water can be made available for municipal use without permanently drying up irrigated farmland. Collaborative rotational farm fallowing agreements between farmers and municipalities make a portion of irrigation water available for urban use. The Company’s initial area of focus is in the Arkansas River basin and its tributaries on the southern Front Range of Colorado.
And while the company is generating revenue from the sale of fruits, vegetables and water, the cannabis greenhouse operations offers significantly higher profit margins. The greenhouses pay for themselves in just over two years, with the current lease rate at around $20/square foot annually and construction costs of around $45/square foot. The company was in the perfect place to expand into the exploding cannabis industry, having already owned the land and water resources necessary for growing. Furthermore, they have the technical expertise to apply best practices from greenhouse growing of flowers and produce to the emerging field of cannabis growing in greenhouses. Lastly, Colorado gets more days of sunlight each year than California, reducing energy costs for the company.
The best part for new investors is that shares of TURV have corrected from over $1.00 in June to just $0.63 as of today. The company continues to fly under the radar of most investors and the share price has dipped in the past week, despite the near completion of their first greenhouse and approval of the marijuana grow license from their tenant yesterday. TURV trades over-the-counter and shares are not incredibly liquid, so you should consider using limit orders.
There is technical support around the current price level, so I believe this is an opportune time to buy the dip. I project the share price will climb back above $1.00 over the next six months, making anything under $0.70 look incredibly cheap. Investors could nearly double their investment if TURV climbs back above the 2015 high. As greenhouse lease revenues begin flowing in, the company becomes profitable and they expand operations, I believe their market value will climb rapidly and reward early-stage investors.
Disclosure: I own shares of TURV and have recommended the company to premium members in the past. I was not otherwise compensated to write this article.
Below is a recent interview their CFO: