Water Infrastructure Development and Hemp Planting Continues at Cadiz

First and foremost, our thoughts are with our fellow Californians and others across the world coping with the COVID-19 pandemic.

We continue to monitor data and regulatory actions regarding COVID-19.  We want to assure you that Cadiz is committed to ensuring the health and safety of our surrounding community and our employees.

California’s Governor issued an Executive Order on March 20th requiring non-essential businesses to close.  However, the State deemed water supply as well as the food and agriculture industry, which includes hemp cultivation and the retail distribution of cannabinoids, as essential services and thereby exempt.  Consequently, for the time being, our operations are continuing in accordance with guidelines from local and state authorities and the Centers for Disease Control.

During this time, our headquarters in Downtown Los Angeles is closed, but our corporate staff has shifted to telework for the foreseeable future.  Our Cadiz Ranch workforce is observing social distancing requirements per the Governor’s order.  The remoteness of our ranch operations provides some insulation against the transmission of COVID-19, which has been more aggressive in denser population centers.

Last fall we began implementing a plan to further develop our water supply infrastructure.  Over the last several months we drilled three new large production wells that substantially exceeded expectation and are now – by themselves – sufficient to satisfy more than 20% of the total water project delivery requirements in an average year.  This has a positive impact in proof of concept as well as the unexpected high productivity of the alluvial wells.  Higher producing wells in more locations reduces capital requirements and increases operational flexibility.

We continue to evaluate the existing pipeline running from Cadiz to Wheeler Ridge for its suitability for conveying water to and from northern supply connections.  We are pleased with the feasibility tests and are bullish on the utility of the asset in furthering water project objectives.

Last month, the Three Valleys Municipal Water District approved an expansive study of the potential interconnection of the alluvial aquifer we have tapped for existing agricultural use and the Bonanza Spring.  The study will build on the substantial work previously undertaken before, during and after the environmental review process and the County of San Bernardino’s management efforts.  Once completed, it is expected to unequivocally address questions about the connection of project operations and regional springs, which is important to buttress public confidence in the scientific integrity of the earlier evaluations.

Meanwhile, we’ve continued progressing hemp cultivation since announcing our joint venture with Glass House Group, So Cal Hemp JV LLC.  We completed two test trials in 2019 that enabled us to isolate good genetic matches for our desert environment and to identify limiting factors on our cultivation.  The tests demonstrated that the hemp grew in particularly harsh conditions and that we needed to solve for variable wind conditions and the need to supplement our organic soils with nutrients.  Consequently, to prepare the Cadiz Ranch for our new crop, our joint venture made significant infrastructure investments over the winter. We upgraded our irrigation lines, tilled and prepped our soils with organic material, and constructed windscreens to protect our plantings in earlier growth stages.

We are pleased to report that planting of our first commercial crop began earlier this month and is on schedule to be completed on 220 acres by the end of April. We have already witnessed attractive growth on the initial starts and look forward to maturity through the summer.  Certain strains will remain in the ground through the fall.

Hemp for CBD and fiber continues to present tremendous opportunity and we intend to harvest and sell what we grow this year primarily into the supply chain for CBD.   With cannabis deemed an essential sector in California and other state COVID-19 directives, we will continue to strive to offer a sun-grown, organic California-grown hemp product that can meet this anticipated demand.

We wish you and your family the very best during these exceptional circumstances and will continue to provide updates on our progress.

[ Early March growth – ready for its closeup ]

[ Early March growth with new screens ]


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