Appendix

Comparative Industry Analysis

Without a specific project and location to evaluate, it is difficult to generalize among different indoor/vertical growing opportunities. For example, a right-sized urban food production facility with a footprint of 50,000 square feet and six levels for growing might contain approximately 120,000 – 150,000 square feet of production space. This is likely to be far too large for pharmaceutical crop production, but far too small for a full-scale cannabis production facility given recent developments in the Canadian medical market.

Moreover, location will also interact with the facility size and configuration. A vertical food crop facility in a densely populated urban center is likely to be much more expensive to build and operate than a 300,000 square foot greenhouse situated on a 40-acre rural property.

Potential returns

Based on reported figures from industry players, we estimate a range of potential returns for each type of operation on a square foot basis. Note the increase in order of magnitude from field crop vegetable production to indoor cannabis. While these are only estimates, also note that the net returns for vertical food farming appear to have a slightly greater downside potential compared with medical cannabis, though the absolute downside for cannabis is significantly larger. Pharma crops are not included, as the market is thinly traded and there are no official statistics available; however, costs may be assumed to be similar to those of food crops.

Costs per unit of sale are shown in Table 13. For food crops, it is assumed that vertical farms achieve yields averaging ten times that of field grown conditions.

Table 13: Annual revenues, costs, and returns per pound/gram, by facility type.

Vertical Food Farming Company Profiles

AeroFarms

Newark, New Jersey

http://aerofarms.com/

Wholesaler to retail and food service. “Over 250 varieties of leafy greens and herbs”

Timeline

• Started in 2004
• Ninth VF currently being built (“World’s biggest indoor vertical farm”)
  • They only claim 4 on their website – no idea what happened to the others

Note:

• Claims: 75X yields per square foot compared to conventional. Aeroponic (root misting w/ water & nutrients), 95% less water (why do hydroponics shops also say this…apparently hydro uses about twice as much as aero), same varieties as field grown, growing time half that of field production.
• Modular systems – Growing structures can be configured to fit footprint of existing buildings
• Newark, NJ. 70,000 sqft. 2 million lbs. Sep 2016. Former steel mill
• Newark, NJ. 5,500 sqft. R&D facility. Nov 2013. Also a redeveloped site
• Newark, NJ. 30,000 sqft. Aug 2015. No reported production level
• School farm in Newark. 50 sqft. Sep 2011.
• Significant grant funding to support efforts
• What happened to the other five greenhouses they developed?
• Makes a number of claims about resource use…seems like either this is true of all vert farms, or some are just repeating the numbers.

BrightFarms, Inc.

NYC

http://brightfarms.com/s/

Wholesale GH grower of packages, branded leafy greens operating in the NYC/DC corridor

Timeline

• Evolved from the NY Science Barge project in 2007
• Began as a GH consultant and designer
• In 2011, introduced the concept of long-term purchase agreement to the produce industry. Not sure this is as innovative as they seem to think it is – many other examples – but okay.
• Has raised over $20 million in capital to date
• Most recently entered the Chicago market

Notes

• Three GHs:
  • Culpeper County, Virginia (2016) – 150k sqft. Greens, herbs, and tomatoes. Exclusively for Ahold grocery stores. Over one million lbs of produce per year. $8 million to build.
  • Rochelle, Illinois (2016) – 160k sqft.
  • Bucks County, Pennsylvania (2013) – 56,000 sqft. Baby leaf lettuces and greens
• “From farm gate to store with nothing [presumably middlemen] in between. Again, this model has been used in the produce industry for years; not sure why they’re trying to claim it as their own.
• The Culpeper County GH was helped out by $150k in grants from the State and County. Virginia’s current governor, who is actively recruiting GH operations to the state

Sources:

http://brightfarms.com/s/#!/about_us/our_history

http://foodtank.com/news/2015/10/from-greenhouse-to-supermarket-brightfarms-ceo-paul-lightfoot-discusses-the

https://www.washingtonpost.com/lifestyle/food/why-a-bright-idea-for-growing-food-in-the-city-had-to-move--to-the-country/2016/01/25/81f96816-bfd2-11e5-9443-7074c3645405_story.html

Farmbox Greens

Seattle, Washington

http://www.farmboxgreens.com/

Microgreen and herb grower serving retailers, restaurants, and farmers’ markets

Timeline

• Started operating in 2011 w/ 100 sqft. space
• Expanded in 2013 to 600 sqft.

Notes

• 600 sqft, growing space in West Seattle
  • 2lbs per 9 sqft. = 133 lbs/week @ 50 weeks = 6,666 lbs per layer per year
  • From photo in hortidaily, looks like 4 layers = 27,000 lbs
• Weekly harvest
• Sells to approx. 30 restaurants; 15-20 varieties
• Looks like a family operation at the moment, but they have announced expansion plans
• Market is focused on the city of Seattle, but does offer delivery via Amazon through partnership w/ Marx Foods, a local distributor
• Production arranged to product almost immediately leaves after harvest
• Apparently not interested in additional investors at this time

Sources:

https://issuu.com/urbanagnews/docs/urban-ag-news-issue-9-april-2015/15?e=16685359/12813086

http://www.hortidaily.com/article/25172/US-Seattle-urban-farmer-serves-top-chefs-and-restaurants-from-his-garage

farmed here

Bedford Park, Illinois (Chicago Area)

http://farmedhere.com/

Hydroponic grower of leaf & microgreens & herbs for retail

Timeline

• Reached full production level in 2013 at first facility

Notes

• Also has branded condiments like salad dressings
• Social impact-oriented policies, incl. local hiring programs
• 90,000 sqft facility. Photo looks like they have 6 growing layers
• Planning a new facility at an industrial food park in Louisville, KY. 60,000 sqft facility

Sources:

http://farmedhere.com/chicago-suburb-home-to-nations-largest-indoor-vertical-farm/

http://farmedhere.com/farmedhere-to-launch-massive-indoor-farm-in-kentucky/

http://farmedhere.com/news/

http://www.businessinsider.com/farmedhere-vertical-farming-chicago-2013-3

Garfield Produce Co.

Chicago

http://www.garfieldproduce.com/story

Grower of hydroponic leaf and microgreens for retail & food service. Branded product

Timeline

• Started in 2014

Notes

• Community-based mission; partnership w/ a local non-profit
• Housed in former auto repair shop
• Founder previously started hydroponics research lab at DePaul University; interned at The Plant, another VF in Chicago

Sources:

https://www.dnainfo.com/chicago/20141212/garfield-park/garfield-produce-citys-fourth-hydroponics-farm-brings-jobs-west-side

Gotham Greens

http://gothamgreens.com/

Leafy green rooftop GH production. Wholesale

Rooftop gardens: 2 facilities in Brooklyn (one integrated w/ Whole Foods Store), 1 in Queens, and 1 in Chicago (75k sqft, powered by renewable energy – what kind?)

• 170,000 sq feet total
• Bagged/boxed salad greens
• Started in 2009, first GH built in 2011, 2nd in 2014 (20,000 sqft, integrated into a Whole Foods)
• “Several” new projects in development
• 30X yield reported

Green City Growers

Cleveland, Ohio

http://www.evgoh.com/feature/green-city-growers/

Wholesaler of hydroponic greenhouse-grown lettuce, greens, and herbs

Timeline

• Opened 3.25 acre GH in Feb 2013
• “Breaking even” in October 2015

NOTES

• Structured as a cooperative (Evergreen Cooperatives), in which workers are hired from the local community, and are offered ownership stake if they stay on longer than 1 year.
• Press release claims to grow 3 million heads of lettuce (60,000 heads per week) and 300,000 lbs of herbs per year. Introduced a proprietary (one-year exclusive) lettuce developed by “a Dutch company” (Bejo? Enza?
• GH took 16 months to complete. $17.5 million build-out in economically depressed part of the city. Uses rainwater capture to augment supply, advanced control systems
• Agreements in place w/hospitals to buy their produce before they went operational
• Delivers within 50-mile radius

• Financed with help from City of Cleveland, National Development Council (NDC) , and PNC Bank. U.S. Department of Housing & Urban Development (HUD): “more than $10 million,” and tax credits (administered by NDC).
• Big focus on community development, e.g., jobs, urban redevelopment.
• Needs to operate at 90% capacity to make money
• Selling price is 50% higher than conventionally-sourced product, but with reportedly longer shelf life, can be an improvement for retailers.
• (Those two points above are very telling. Implies that at market price for regular produce, they will never break even. Then why does management claim hydroponic is lower cost???)
• Also telling is that they generally refrain from making claims that they are “disrupting” anything.

“The level of commitment from buyers is not as high as we thought it would be. Everyone talks about buying locally, but it’s a challenge to get the big guys who can move the needle. Either we’re not delivering the message, or they’re used to doing what they always do.” John McMicken, Green City Growers

Sources:

https://www.clevelandfoundation.org/news_items/12501/

http://www.crainscleveland.com/article/20150824/BLOGS16/150829915/green-city-growers-doubles-sales-in-the-past-year

Green Sense Farms

Portage, Indiana (Greater Chicago Area)

http://www.greensensefarms.com/

Grower of live and cut leafy greens for retailers and food service, supplier for branded mix products from other companies

Timeline

• Opened in 2014

Notes

• 25 foot high growing space
• “The country’s largest commercial indoor vertical farm” (How many make this claim?)
• Actively seeking investors, including crowdfunding
• Provides consulting services to others looking to start up their own operation
• Founder: “We realized that to be successful, the farm had to be big”
• Plant manager previously worked in Antarctica GH
• “7,000 LEDs” supplied by Phillips (as of 2014). What fixtures were they likely using? How much growing space does that cover?
• Founder: “City farming is a bit of a misnomer. To build an inner-city farm is very expensive. We’re a large commercial production and yield roughly 3,000 cases of produce a week. If we were in Chicago, our rent would be high, as would our utilities, and we’d all be fighting traffic. Our input costs are lower here, yet we can easily service the whole Chicago market.”

Sources:

http://www.nwitimes.com/niche/shore/shore-newsletter-article/creating-groundhog-day-constant-gardening-at-green-sense-farms/article_946cd7bf-21d6-59f3-a4e4-148dfb853188.html

http://chicagoist.com/2014/07/24/green_sense_farms_scraps_sun_for_le.php

Green Spirit Farms

New Buffalo, Michigan

http://www.greenspiritfarms.com/

GH grower for retail and food service in the Detroit and greater Chicago areas.

Timeline

• Founded around 2011 (press coverage begins in 2012)
• High-profile demonstration facilities during the 2012 Summer Olympics and local projects with universities in Michigan.

Two locations: 20,000 sqft. GH in New Buffalo and one in Detroit (no specs given). Both are retrofits of abandoned industrial buildings.

Wide and evolving range of products: basil, tomatoes, peppers, snap peas, lettuce, misc. greens, stevia, strawberry, Brussels sprouts.

Started with traditional hydroponic planting media (rockwool) in stacked OmegaGarden Volksgarden systems. Reported 30% reduction in days to maturity.

More recent pics (circa 2015) look like more traditional trays on shelves approach. Too many moving parts in the Volksgardens?

Water recycling, nutrients extracted from water and reused. Seems like a lot of custom work – like some other operations included here, very high costs.

Wind and solar power

Claims: lower labor costs, lower risks, lower equipment costs, but much higher electricity costs (interesting that in 2012 interview they said there was no difference in electricity)

Sources:

Edible Michiana. Winter 2012. http://cdn.coverstand.com/18629/134969/134969.3.pdf

Seedstock. June 10, 2013. http://seedstock.com/2013/06/10/vertical-farming-venture-achieves-sustainability-and-success-in-new-buffalo-michigan/

Illumitex product video: https://vimeo.com/121032415

Greener Roots Farm

Nashville, TN

http://greenerroots.com/

Hydroponically grown herbs & leafy greens for retail & restaurants

Timeline

• Started out as a rooftop operation in 2013
• Changed name & opened new facility in July 2014 – largest indoor operation in Nashville

Notes

• Serve 10 mile radius
• Claims 10X yield improvement
  • 1170 heads of lettuce per week, 232 sqft footprint
• Capacity of 6 tons/year, production has been close to capacity since opening
• Founder seems happy with current operation; no changing-the-world talk.

Sources:

http://www.tennessean.com/story/life/food/2015/07/17/greener-roots-farm-finds-success-urban-pastures/30318773/

http://seedstock.com/2014/01/21/entrepreneur-experiments-with-micro-scale-hydroponic-growing-on-a-nashville-rooftop/

Local by Atta (Atta Farms)

Moncton, New Brunswick

http://www.atta.ca/

Hydroponic leafy greens, microgreens, and herbs for small retailers and restaurants in the greater Moncton NB area, also weekly basket delivery.

Timeline

• Started selling produce in 2014
• Fire destroyed original location in early 2016
• New facility opened in summer 2016

Notes:

• Locally-focused
• Four employees
• Produces ~ 1000 bags (assume 4-8oz?) per week: 250-500 lbs
  • Wholesale price ~ $1/bag
  • Basket price ~$3/bag
  • Assume 50/50 wholesale/basket business ~ $2,000/week
• “had trouble meeting demand” in old location. New location is 5X larger (?)
• Adding space for testing new product

Sources:

http://www.cbc.ca/news/canada/new-brunswick/moncton-s-local-by-atta-sees-growing-business-at-hydroponic-farm-1.2969014

http://www.cbc.ca/news/canada/new-brunswick/local-by-atta-open-fire-1.3653476

Lufa Farms

Montreal & vicinity

Rooftop greenhouses, same-day produce delivery

http://lufa.com/en/

Timeline:

• Founded in 2009; first GH built in 2010, 400 initial customers in urban core
• 2013 – Second GH built outside urban core

Notes:

• Do not take up new land – only use existing built footprint
• Rainwater capture, recirculation of water and nutrients
• Reduced energy use
• Composting
• Biological control
• Partners w/ other farmers and food system folks who share their values
• “Urban greenhouses, local partnerships, ecommerce platform, fulfillment methodology”
• Ahuntsic GH: 70 metric tons per year. 32,000 sqft. Built in 2011 (COST? Looks like a retrofit)
• Laval GH: 120 metric tons per year (what’s the mix?) 43,000 sqft. Built in 2013 (COST? Looks newly built, outside of urban core, highway access. Partnership w/ Montoni Group and KUBO)
• Completely hydroponic, therefore not organically certified, though they do not use synthetic inputs. NOT a completely closed system.
• Their original GH reportedly feeds ~2,000 people (how much and of what?). DO THE MATH: Roughly 80 lbs of fresh produce per person. HOW DOES THIS COMPARE TO PERCAPITA CONSUMPTION IN EASTERN CANADA METRO?
• Weekly basket model

GH-grown products for sale (Sep 9, 2016) 1pint = roughly 1 lb

Partners provide other items: dairy, meat, baked goods, staples (pasta, grains, beans), all delivered through their fulfillment system.

• $15 minimum order
• 318 drop off points in 87 neighborhoods in the greater Montreal area
• 224 partner/suppliers
• 143 produce items, 30 of which they grow themselves

Their marketing is very much “locavore,” traditional farm vibe…and yet here they are growing in a high-tech GH…

People

• Mohamed Hage – Founder/CEO. Software & real estate background.
• Lauren Rathmell – GH Dorector, Founding Member – bio background (McGill Univ). Designed the system, works on GH operations and R&D
• Yahya Badran – Director of Enineering, Founding Member. Construction background
• Kurt Lynn – Advisor. Sales & Marketing
• Other key personnel attributes
  • Dave Furneaux – Board Chair. Finance
  • Finance & HR
  • IT is its own department
  • “Fulfillment Manager” – Production & shipping?
  • “Corporate Development Manager” – Sales?

60 total employees

Lufa Farms Inc.

Address: Lufa Farms 201-1400

Rue Antonio-Barbeau Montreal QC H4N1H5

Phone: 514-669-3559

Mail: info@lufa.com

Media: pr@lufa.com

The Plant

Chicago

http://plantchicago.org/

Multi-use urban experimental farm. Vertical & aquaponics growing systems

Timeline

• Established 2011
• Went to fully renewable energy (anaerobic digester-to-biogas) in 2013

Notes

• Guiding principle: circular economy: renewable resources, electricity generated on site
• Founder owns the grow space (for profit?), nonprofit runs auxiliary programs (recycling, educational programs)
• Other food and affiliated companies occupy the space (coffee, bakery, brewery)
• Farmers’ market weekly in the summer, monthly in the winter, spring & fall
• Built in an abandoned 93,500 sqft meatpacking plant (Back of the Yards neighborhood). Work still in progress

Sources:

http://www.huffingtonpost.com/2012/05/07/the-plant-explained-chicago-urban-farm_n_1497832.html

Sky Vegetables

Newton, Massachusetts (GH located in the Bronx)

http://www.skyvegetables.com/

Commercial scale rooftop hydroponic. Leafy greens & basil.

Timeline

• Started planning projects around 2009
• First GH concept was permitted in 2011/12 but to date has not been funded
• GH in the Bronx opened in 2013

Notes

• Initial project was to have been in Brockton, MA (Boston suburbs) circa 2009. 66,000 sqft., alternately reported as 44,000 sqft. Funded through combination of private capital and grants.
• Bronx GH is 8,000 sqft. on top of public housing project
• Articles say they have multiple rooftops, but no actual evidence

Sources:

http://www.myfreshlocal.com/articles/article_detail/sky-vegetables-hydroponic-rooftop-farming-for-urban-centers

http://www.tauntongazette.com/article/20091113/NEWS/311139938

TruLeaf

Bible Hill, Nova Scotia

http://www.truleaf.ca/

Branded produce grower and (potential) platform owner

Timeline

• Operations started in 2015

Notes

• Revenues from food sales: one facility w/ 10,000 sqft. Produces 200,000 lbs of greens per year
• Trademarked proprietary growing system to license or sell to other farming operations. Very adamant that they are not simply a greenhouse
• Working on commercializing high-value products for functional foods, nutraceuticals, and cosmetics
• Targeting dense urban markets as well as remote locations in harsh climates, in the fresh produce, functional foods, pharma, and health product manufacturing markets
• Currently markets seven products: baby kale/arugula/romaine, two salad blends, spinach, and basil. Culinary microgreens also being rolled out.
• Setting up in San Francisco
• Appears to be active in R&D; has research relationships across north America
• Management team and Board has significant experience w/ pharma industry and has several technical staff members who appear to be involved in R&D
• Traceability is one of their major selling points
• Reportedly has made deals to supply major retailers and food service distributors (note: one of their customers, Gordon Food Service, advertises the fact that it distributes across North America. Doesn’t this contradict their “local” focus?
• Seeking $2.65 million in Series A funding, after raising $1.5 million in 2015.
• While they lean on the local aspect a little heavily, their points in support are a little better than what some of the other GH growers are telling in their marketing pitch

Sources

http://www.truleaf.ca/about/team/

https://agfundernews.com/canadian-indoor-ag-player-truleaf-ramps-up-distribution5534.html

Note, some sites (agFunder) are simultaneously acting as a conduit for fund raising and are reporting on the companies themselves. Any time one of these kinds of companies is listed as a source, be wary of their reporting.

Urban Produce, LLC

Irvine, California

http://urbanproduce.com/

Grower of living microgreens and wheatgrass for retail & food service

Timeline

• Started operations in 2014

Notes

• They’ve patented and named their production system “The Urban Produce High Density Vertical Growing System (HDVGS),” stated interest to build more farms along their model “worldwide”
• 5,000-6,000 sqft. growing space. Claims to produce 16-acre equiv (696,960 sqft)
  • 2lbs per 9 sqft. (WSU field trial)  = 150,000 lbs per year
  • Say they sell wholesale @ $1/oz, revenue would be $900k/year ($75k/mo)
  • Costs?
    • Rent (loopnet) $7k - $8k/month
• Goal is 100 facilities over the next 3-5 years
• Several Cal Poly grads on management team.
• Several ag/food people on advisory board: CEO of Frieda’s (specialty produce distributor); EVP from Apio Produce

Uriah’s Urban Farms

Tampa, FL

http://www.uriahsurbanfarms.com/

Hydroponic leafy greens and herbs. Fully indoor. Direct marketed to consumers and commercial clients (restaurants, corporate, sports venues)

Timeline

• Founder has history with traditional hydroponics dating back to 1990s
• Switched to vertical format in 2010

Notes

• 24,000 sqft. warehouse
• Switched to focused spectrum LEDs (Illumitex) in 2015
• In a press release, indicated desire to expand to other markets.

"If you look at the history of indoor agriculture, you have NASA trying to feed astronauts in space. But if it wasn't for underground illicit agriculture, the technology wouldn't be there. It's on the shoulders of all those who have been incarcerated that now growing food indoors is viable." Dave Smiles, founder

Sources:

http://www.tampabay.com/things-to-do/consumer/for-farmer-dave-and-indoor-farming-things-are-looking-up/2256055

http://www.producegrower.com/article/illumitex-and-uriahs-urban-farms-partner-up-0116/

Investor targets for medical cannabis

In a recent investor presentation, the publicly-listed holding company, PharmaCan laid out its criteria for evaluating potential acquisitions, summarized in Table 14, below. This might be instructive when evaluating investments in companies or in facilities.

Table 14. PharmaCan assumptions for medical cannabis companies

Based on these criteria, the two publicly-listed firms listed below (2016 fiscal year-end) are currently underperforming these expectations, though are still currently profitable:

Other publicly-traded firms, such as Canopy Growth and Mettrum, are currently operating at a loss.

For more information email: