ColorPoint to Transition to Full Hemp Production in Merger With AgTech Scientific
ColorPoint KY, part of the #8-ranked ColorPoint growing operation on Greenhouse Grower’s Top 100 Grower list, announced plans to transition to a hemp-only company and will merge with AgTech Scientific of Paris, KY, to make it happen, according to a May 29 press release from the two companies. The merger results in a fully integrated hemp company complete with indoor and outdoor hemp production and processing and distribution channels.
In June 2019, ColorPoint KY will commence an 1,800,000 square foot grow of indoor hemp, with ongoing, year-round production continuing for the foreseeable future. The Paris, KY, facility will produce hemp clones (liners) for spring sales to farmers buying through AgTech Scientific and will finish hemp plants indoors during the year, according to Steve Sloan, ColorPoint’s Vice President Business Development.
Once the spring shipment finishes in June, the Granville, IL, ColorPoint facility (formerly Mid-American Growers), will transition to hemp-only production under the new ownership of Red White & Bloom. The Granville facility includes 3.6 million square feet of environmentally controlled greenhouse space and nearly 230 acres of outdoor production. MichiCann Medical, operating as Red White & Bloom, has signed a letter of intent to acquire the operation, according to a May 28 press release. It plans to grow hemp at the Granville site for extraction to manufacture CBD-derived medicines and products.
Big Changes for ColorPoint’s Ornamentals Customers
ColorPoint supplies ornamentals to big box retailers such as Lowe’s Home Improvement and Walmart, which will now have to source competent and capable suppliers to fill the void. Sloan says upon being told the news, the retailers congratulated the company and wished it and its employees well with the transition.
“Our legacy products are being shipped to our legacy customers,” Sloan says. “We are fulfilling all of our obligations for spring and providing the same exemplary quality products and customer service we have always provided. At the same time, we are all very excited about the new future that now lies ahead of us.”
Each Company Brings Its Own Strengths to the Merger
AgTech Scientific is a fairly new company, formed in 2015 as a pet food research project with an emphasis on dosage and delivery of CBD to pets and equine. It eventually settled on Paris, KY, as its home base and partnered with local farmers in 2018 to grow more than 80 acres of hemp. The company broke ground on a 50,000 square foot GMP-standard manufacturing and extraction facility in Oct. of 2018 with a projected opening of August 2019, according to the press release.
Scott says AgTech Scientific will supply industry-specific hemp knowledge along with resources and best practices, while ColorPoint KY provides the cultivation and production expertise of master growers and the logistics, shipping, and distribution know-how.
“The merger will allow us to seamlessly scale, mechanize, and automate in a way we haven’t before,” she says.
According to the press release, the two companies met in 2017 and later formed a business relationship to produce clones beginning with the 2019 outdoor farming season. Additionally, a successful beta test of an indoor hemp grow in late 2018 led to a supply agreement between the companies that included agricultural processing, clones, and an indoor grow during the summer season. The Kentucky Department of Agriculture has granted a Hemp Grower License and Hemp Processor License to the two companies. For now, both companies plan to retain their individual names.
Entrance to a New Market Brings New Opportunities
Sloan says this new opportunity will provide a very positive future for ColorPoint’s employees, with plenty of opportunity for them to learn and take on new responsibilities. Additionally, there will be an increased need for personnel as ColorPoint creates new positions beyond the positions it has traditionally had.
With the increasing competitive and challenging nature of the big box retail environment and ever formidable online shopping options for snagging consumer market share, Sloan says it has become increasingly difficult for floricultural suppliers to provide costly products and services at margins that will support a successful and sustainable business. In response to these pressures, over the last several years Sloan says ColorPoint has been looking for new customers, new products, and new approaches for its business with the purpose to be more sustainable and successful by more fully utilizing greenhouse space during off-peak seasons.
Regarding the merger, ColorPoint Co-President Art VanWingerden said in the press release, “Today is a great day for the company, our employees and our families. The strength of our unique approach and partnership with local farmers, combined with our indoor grow capabilities and our vertical extraction integration, places ColorPoint and AgTech in position to take a leadership role in the emerging U.S. hemp industry.”
How you think the cannabis industry will impact the ornamentals market. Do you think this is just the beginning of ornamental operations converting over to cannabis production? What does that mean for those who stay in the market? Share your thoughts with me at [email protected].