Camarillo Tomato Farm Sells for $93 Million

On the former Houweling’s Tomatoes farm in unincorporated Ventura County south of the Camarillo Airport, Glass House Brands Inc. is renovating greenhouses and support buildings totaling about 1.7 million square feet on 40 acres of land to create what it calls the largest cannabis growing operation in the world. 

Glass House bought the property from Houweling for $93 million in cash and stock considerations.

Upgrades to the buildings will include automated nutrient delivery and irrigation systems; an improved HVAC system to optimize climate conditions; and installation of black-out curtains, a high-density gutter system, dry rooms and processing facilities. 

The upgrades are expected to be completed in the first quarter of next year. 

Kyle Kazan, chief executive of Glass House in Long Beach, said the greenhouses are top of the line and the company has the right team to grow quality cannabis. 

“The climate, the facility and the people should easily allow us to garner the best cannabis at the lowest cost,” Kazan said.

Glass House became a publicly traded company this summer after merging with Mercer Park Brand Acquisition Corp., a special purpose acquisition company. The company currently trades on the over-the-counter market with the ticker symbol GLASF and on the NEO Exchange, Canada’s tier-one stock exchange, under the ticker symbol GLAS.A.U

The company has three brands of cannabis – Glass House Farms; Forbidden Flowers, actress Bella Thorne’s female Millennial- and Gen-Z-targeted brand; and Mama Sue Wellness, the brand of industry activist Sue Taylor targeted to consumers aged 35 and older.

The current renovations are just phase one of an extended refurbishment to the total 5.5 million square feet of greenhouse space on the property, Kazan said.

Adding together the total 5.5 million square feet near Camarillo plus 500,000 square feet of cultivation space near Carpinteria in Santa Barbara County, Glass House will have 6 million square feet for growing marijuana in Southern California. Kazan said he didn’t know of anyone else in the world with that amount of growing space. 

“It is certainly ambitious, but we are up to the task,” Kazan said. “We think the opportunity is right here right now.” 

Casey Houweling, the owner of Houweling’s Tomatoes, is still operating his vegetable farm in four remaining greenhouses on 85 acres. The $93 million sale came just after Houweling repurchased the property from Equilibrium Capital, a Portland, Ore. private equity firm. Equilibrium bought the Camarillo and Utah facilities of Houweling in February 2019. In August, the investment firm announced a rebranding of its Mona, Utah property from Houweling US Holdings Inc. to Longvine Growing Co.

Houweling said that the sale of the Camarillo property included a repurchase agreement containing a clause that if he were to buy the property back, he would have to sell it to a cannabis company.

That’s how Glass House entered the picture, although Kazan said he and company co-founder Graham Farrar and some other executives toured the Houweling property a few years ago. 

“When I was walking it with Graham and a few partners, my mouth was agape,” Kazan said. “I had never seen anything so big; it was amazingly efficient. It was jaw dropping.” 

Political development

Houweling was also the money man behind the Measure O ballot proposition last November to make it legal to grow cannabis in Ventura County. 

He financed the collection of the 33,000 signatures in the midst of the coronavirus pandemic, which he called “expensive” to do.  

“It’s a fair amount of risk. You have to run a campaign. You have to make sure that you have the votes lined up,” Houweling said. 

But the measure passed with 57 percent of voters approving it. The beauty of the ballot proposition system is that the proposers can write the language the way they want. But “you have to make sure not to make it too much of a political hot potato,” he added. 

He got around that by adopting many of the regulations passed in Santa Barbara. 

Measure O “allows for the cultivation of cannabis and ancillary activities in pre-existing greenhouses and other indoor structures on certain land zoned agricultural, industrial, and commercial on premises that are 1,200 feet away from sensitive uses such as schools, parks, drug and rehab centers within the unincorporated area of the county in existence as of March 4, 2020,” according to a document at the Ventura County website. 

“It was a brilliant move, if you ask me,” Kazan said of Houweling’s backing of Measure O.

Kazan likes being in Southern California and in Ventura County. After all, it’s not that far from Los Angeles International Airport, where investors can fly in and come visit the farm. 

“We want to host you as a shareholder and show you what you’ve invested in,” Kazan explained. “We are looking forward to holding events. We don’t have any on the calendar but you can bet they are coming soon.”

Most people have never even seen a small cannabis operation, so how about the world’s largest? Kazan asked. 

“We are looking forward to having some fun and being inclusive so that investors can see and make this kind of a little bit different public company,” he said. “That is going to be our differentiator and I would tell people to just get ready.”

Houweling’s Tomatoes has been located in the Camarillo area for 25 years and Houweling believed that the company is well respected and wants to maintain that. 

There are a lot of benefits to the community from turning over the farm to Glass House – from the tax revenue it generates to the jobs it provides, he said. 

However, the difference in profits between growing cannabis and growing tomatoes is at a minimum about 10 times in favor of marijuana, Houweling said. 

Wholesale cannabis prices are down about 45 percent in California, he added. A story from August in MJBizDaily, an online publication covering the cannabis industry, put the state’s price drop at 60 percent for outdoor grown pot and up to 20 percent for indoor grown plants. 

“There is a typical agricultural fluctuation that happens because there is still a fair amount of cannabis grown out in fields like up in the Emerald Triangle (Humboldt, Mendocino and Trinity counties),” Houweling said. “Outdoor product is pretty volatile in production and quality, which can add a major price impact.” 

Underground production of cannabis is due primarily to the state’s regulatory environment, he added. 

“If you can avoid being legal and produce outside of the legal framework, you can make a lot more money,” Houweling said. 

But to him it is more than just about economics. 

“Of course, you want to be profitable,” Houweling said. “Our goal is to be profitable but it’s also a goal to continue to be a valued member of the community.”