California Ghost Town Destined for Marijuana Resort Sold to Oil Company
Nipton, the once booming mining location which is now a ghost town, was recently bought and sold by American Green, a marijuana company with bigger ideas than pockets. This 80 acre town which lies at the edge of the Mojave Desert in California was intended to be transformed into a cannabis-themed recreational destination that included an Old West hotel that would be transformed into a “buds and breakfast” and CBD-infused water. American Green planned to make it the newest marijuana hotspot, complete with marijuana themed boutique stores, cultivators and glassblowers. When the company sold the land to an exploratory drilling company (Delta International Oil & Gas) earlier in the month, it appeared as though plans had changed. However, this doesn’t appear to be the case at all.
American Green sold the land (which it had purchased for $5 million) to Delta for $7.7 million. $3.7 million went towards American Green’s debt and the other $4 was issued as Delta “Series A Stock.” The sale was made under the condition that American Green could continue to build the town for the next 5 to 10 years. While they may be toning down some of the marijuana heavy themes, David Gwyther, American Green’s Chairman still said “it’s going to be the kind of environment we call cannabis hospitality.”
The Relationship Between American Green and Delta
According to Gwyther, American Green controls Delta so the sale was akin to moving the town “from one pocket to another.” According to Nasdaq, American Green owns 80 percent of Delta. The change in ownership appears to have been necessary due to the challenges American Green faced as an unaudited, non-reporting “Pink Sheet” company. It was very difficult for the company to raise capital whereas this problem will be eliminated with Delta. As a fully reporting company, Delta will face far fewer challenges raising capital and dealing with the obstacles with which American Green dealt. Due to the fact that marijuana is still illegal on a federal level, marijuana companies face a much harder problem when dealing with banking issues and getting loans.
“American Green can now expend less of its energy on capital raising, and focus on implementing the revenue-generating components of Nipton, and its other investments, along with many new, and exciting projects on the horizon.” Says Gwyther. “I believe that this will be a win-win situation for American Green and our shareholders.”
The Shareholder Impact of the Sale
American Green, which is one of the first publicly traded tech companies in marijuana, has been in business for almost 20 years and has over 50,000 individual shareholders. It appears that this change in ownership won’t negatively impact the company’s shareholders and will likely acre less debt and expense through the building process of the town in the long run.
California legalized marijuana for recreational use at the end of 2016 but the state is still in the process of completing the infrastructure for the new aspect of the industry. Should American Green’s plans come together for the town of Nipton, the state of California will have a recreational marijuana haven for those who enjoy the benefits of the plant.