MJ Holdings Shareholder Update 2019 - Seite 2

·       In January of this year, we closed on the purchase of 260 acres of fertile farmland in the Amargosa Valley of Nevada - immediately adjacent to our current, three-acre cultivation facility. With the acquisition of an additional cultivation license and the recent approvals of local and state regulators, we expect to commence grow operations this spring on a new five-acre facility utilizing the Cravo cultivation system, bringing our total outdoor cultivation capacity to more than 320,000 square feet. With this and the addition of our 15,000 plus square foot indoor facility in Las Vegas coming on-line in 2020 (discussed further below), we expect that MJ Holdings will be the largest grower of marijuana in the State of Nevada by the end of 2020.

·       While we had a successful first harvest of our “test grow” in late 2018, our dried product weight missed our initial estimates and we netted about 5,400 lbs. of tested product available for sale. Additionally, the THC levels of our product showed variations that made it difficult to sell as flower.  Thus, we elected to concentrate on pre-rolled marijuana cigarettes and marijuana trim to be processed into oil. Due to a significant increase in failed flower entering the market (marijuana that has tested positive for yeast and mold but can still be processed into oil) from our competitors, we saw a steep drop in wholesale pricing for trim in Nevada to under $400 per pound. While we are disappointed that we were unable to achieve the goals that we set for ourselves with our first test grow, we are extremely happy that: (i) we were able to successfully grow in the harsh conditions of the Nevada desert; (ii) we had a more than 90% product passing rate, and (iii) the lessons we learned in our first season that we successfully implemented with our most recent harvest. 

·       In an effort to have greater control over our grow, we decided to scale back a bit in 2019, reducing our crop from 13 different marijuana strains down to six and reducing the number of plants in order to achieve better overall results. We harvested the plants a full month earlier this year and the results of our 2019 harvest indicate that we made very good decisions. While maintaining our more than 90% passing rate, our crop is showing much higher and consistent THC concentrations (between 20% and almost 27%) with excellent terpene profiles. We expect total 2019 dried weight to be in excess of 3,000 lbs. with as much as 1,500 lbs. being marketed as flower.  Sales of our flower have been at upwards of $1,400 per pound; and, currently, the top Las Vegas dispensaries are acquiring our products, including our LV Slugger pre-rolls, our pre-packaged Highland Brothers brand flower and our processed distillate for use in their own edible and vape products.  With our own processing facility expected to commence operations in mid 2020, we expect to have considerably higher revenues from this harvest than last year’s test grow.