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Cannabis Watch: Urban-gro eyes 80% revenue growth as indoor farm specialist

Bradley J. Nattrass co-founded Urban-gro Inc. in 2013 while he was CEO of Bravo Lighting LLC, an LED lighting retrofit company that revamped convention centers and other commercial buildings.

At the time, Cannabis was moving toward broader legalization in Colorado, so Nattrass started branching out into grow lights for indoor cannabis cultivators.

“With cannabis legalizing, we said, ‘Let’s see if there’s a need for lighting in cannabis’ and sure enough, there was,” Nattrass told MarketWatch.

Now roughly nine years later, Lafayette, Colo.-based Urban-gro

trades on the Nasdaq and employs 125 people. As an ancillary services provider in the cannabis and vertical farming space, Urban-gro engineers, designs, sources, maintains and installs controlled environment agriculture (CEA) facilities for indoor plant cultivation.

Although it’s worked with multi-state cannabis operators such as Trulieve Cannabis Corp.,

Cresco Labs Inc.


and Cronos Group Inc.

Urban-gro is not considered a plant-touching company, so it’s been allowed to list its shares on the Nasdaq.

Urban-gro is currently considering several acquisitions, with plans to close at least two by the end of the year, Nattrass said. Urban-gro is also looking to increase its head count by 25 people to a total of 150 by the end of 2022, including a managing director in the Netherlands to build up its European presence.

Urban-gro currently has no debt, with about $35 million in cash and a $30 million project backlog as of Dec. 31.  It’s targeting 2022 revenue of $110 million, up about 80% from 2021. Between 2020 and 2021, its revenue grew by 140%.

Urban-gro raised $62 million in February, 2021, by uplisting its shares to the Nasdaq with underwriter ThinkEquity.

In October, Urban-gro added industry veteran Sonia Lo to its board of directors. Lo most recently worked as CEO Sensei Ag, an indoor farming venture backed by Oracle Corp.

founder Larry Ellison.

In a deal announced on March 14 to widen its service offerings, Urban-gro is acquiring Emerald Construction Management Inc. for up to $7 million.

Urban-gro CEO Nattrass said larger companies may be able to focus on construction of massive grow projects, but Urban-gro sees less competition for mid-sized grow facilities that cost around $20 million.

“We have this large niche for indoor facilities of 10,000 to 50,000 square feet,” he said. “It’s really underserved. Now we can do full design and build as well.”

Urban-CEO Bradley J. Nattrass


The company’s market capitalization of about $93 million places it in the realm of micro-cap stocks with exposure to two rapidly-developing industries, vertical farming and legal cannabis.

While it’s diversifying into Europe and other types of farming, most of its controlled environment agriculture business historically has been with cannabis companies.

Maxim Group analyst Anthony Vendetti on March 21 initiated coverage of Urban-gro with a buy rating and a 12-month price target of $20 a share.

“After accumulating significant expertise in… cannabis, we believe the company’s entry into new verticals and geographies will provide additional levers to drive topline growth,” Vendetti said.

In one of its earlier deals, Urban-gro in 2017 invested an undisclosed sum for a minority stake in Edyza Inc., a wireless sensor company that helps generate data to improve crop yields and boost efficiency.

Urban-gro shares are down about 13.5% in 2022, compared to a drop of 22.9% by the AdvisorShares Pure U.S. Cannabis ETF

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