A Canada-based company plans to use a 196,000-square-foot building in Beard Industrial tract to manufacture and distribute cannabis products. It would possibly be the largest commercial cannabis facility in California. The building, on Daly Avenue, is pictured here, on Monday, Dec. 9, 2019, in Modesto, California.
A Canada-based company has big plans to manufacture and distribute cannabis products from an expansive building in Modesto.
In April, Transcanna Holdings Inc. announced the purchase of the 196,000-square-foot building on Daly Avenue in the Beard Industrial District. The company with corporate offices in Vancouver has also acquired locally based Lyfted Farms, a county-permitted cannabis business that will manage the Modesto operations.
Lyfted is seeking a permit from Stanislaus County for growing cannabis in a 32,700-square-foot area inside the building. Cannabis products would be processed and packaged in the former turkey processing plant and distributed to retail outlets in California.
At full scale, the production facility operating seven days a week could employ 200 to 250 workers. In addition to cannabis flower, pre-rolls, oils and cannabidiol, the plant would use an extraction process to make edibles and vaping products.
The three-story facility also has the ability to freeze harvested cannabis to preserve its essential ingredients.
“We like indoor growing, but most of the facility would be for distribution and manufacturing,” said Steve Giblin, Transcanna’s chief executive officer.
Plans are to begin operations in the first quarter of 2020 with a small cultivation area and distribution, said Bob Blink, chief executive officer of Lyfted Farms. Security measures will include an 8-foot perimeter fence, surveillance cameras, an alarm system and at least three security guards.
“It is very secure,” Blink said. “Security is a big point locally and in the state. It has the best security around just by the way the building is designed.”
Transcanna is a startup company formed two years ago. With the Modesto processing plant, Transcanna’s website says, the company is positioned to serve the cannabis market in California, which apparently is regarded as the largest in the world. Extensive improvements have been made to the building.
The company’s stock is listed on the Canadian Securities Exchange. The stock price has swung from $7.88 per share in May to closing at 79 cents on Monday.
A county Planning Commission hearing on the project could be set for Dec. 19, if the applicants come through with requested information for the county this week, or the hearing could be held in January.
County Senior Planner Kristin Doud said staff was waiting for information such as whether rooftop parking would be utilized. In addition, the county and the applicant still were discussing the fees to be paid to the county. A facility of that size could generate millions of dollars in fees over a five-year period.
A study on air quality and odor control could raise some questions before the Planning Commission, and traffic is another potential issue.
Doud said the cannabis fees spelled out in development agreements are based on the cultivation square-footage and anticipated output of manufacturing and distribution or may be a simple 3 percent of gross sales.
An earlier proposal for the Daly Avenue building was one of the original applications in 2017 when the county rolled out its permitting program for commercial cannabis, which was legalized by Proposition 64. A county screening process rejected that first application because it included too many applicants for one site, Doud said.
Lyfted came forward with the current application when a second county application window opened in August.
Transcanna said in April it had purchased the Daly facility for $15 million and would make an $8 million down payment, while the seller, Cool Swang, carried a $6.5 million promissory note at 7 percent interest for 13 months. In October, the company said the loan’s maturity date was being extended six months and issued 500,000 in restricted shares of stock (priced at 56 cents) to Cool Swang to settle a $280,000 fee. Cool Swang is owned by Chad Swan.
When asked about the company’s current stock value, Giblin said there was initial enthusiasm for investing in the cannabis industry but the realities of business are now affecting the stock price. Investors will want to see profits on the horizon.
Giblin said he expects the Daly building and the strong facility management team will help establish investor confidence. Alan Applonie was hired in June as the plant’s general manager. According to a news release, Applonie was instrumental in growing a consumer packaged goods company “from startup to two billion dollars in annual revenues” and has infrastructure systems experience with Amazon, Starbucks, Walmart and Kroger.
Transcanna also will rely on the expertise of Lyfted Farms. Earlier this year, county supervisors approved a permit for Lyfted to grow cannabis indoors and package products in a 19,500-square-foot warehouse on Jerusalem Court in north Modesto.
The Canadian firm also acquired a cannabis business called SolDaze, which is based in Santa Cruz.
Giblin, who has a history of turning companies around in the hotel and real estate industries, said the company needs to obtain the county permit and then approval from the state.
“We are happy about the strategic purchase of the Daly building and we really like Modesto,” Giblin said. “We think it’s a great place to grow.”