Harborside Inc (CSE: HBOR) is evidently focused on expansion. The company this morning announced a planned expansion of its cultivation operations in Salinas, California, while also announcing the commencement of sales in a new branded category – cannabis clones.
The expansion at the 47 acre Salinas production campus will see upgrades conducted at one of the 45,000 square foot greenhouses. Upgrades, which include the installation of LED grow lights along with blackout curtains among other items, are currently anticipated by the company to increase production at the greenhouse by 50% on an annual basis.
The changes being undertaken at the facility are expected to have the associated costs effectively recouped within a period of twelve months following the completion of the upgrades. Wholesale revenue capacity as a whole is expected to increase by 10%, while increasing the total production capacity of the operation by an estimated 7%.
More immediately however, Harborside will commence the sale of cannabis clones produced at the Salinas facility. Clones are to be sold under the Harborside Farms label, with all Harborside branded locations expected to carry the product. Several figures were provided in connection with this initiative.
- Clones are anticipated to make up approximately 5% of total annual retail sales.
- In dollar terms, clones are expected to amount to $2 million in annual net retail revenue in 2020, at current estimated gross margins of 52%.
- The new Harborside Farms clones are anticipated to amount to 50% of total clones sales in 2021, resulting in estimated clone sales of $1.0 million under the banner, at estimated gross margins of 90%.
- Margin across the entire clone category is anticipated to rise to 70% as a result in 2021.
“We have carved out a strong reputation for supplying high-quality cannabis products to the growing California market and these upgrades are a crucial investment that will fuel our growth heading into 2021. Leveraging the strength of our Salinas facility, we’re thrilled to be officially commencing sales of clones that are grown at our farm and only available at our stores immediately.”
Peter Bilodeau, Interim CEO & Chairman
Furthermore, the company also highlighted that sales of Harborside Farms branded product has seen continued success at all Harborside locations. Sales of product under the banner have increased by 229% on a year over year basis, with the banner now accounting for 42% of all retail flower sales through the end of the third quarter of 2020.
Harborside Inc last traded at $1.80 on the CSE.
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