Canopy expands to BC with plans for large marijuana greenhouse

Canopy Growth has formed a joint venture to develop a 1.3-million-square-foot marijuana greenhouse in British Columbia.

The agreement, announced in a news release, nearly doubles the Ontario company’s total greenhouse and indoor production footprint to 3.2 million square feet across six provinces.

Canopy – Canada’s largest licensed medical marijuana producer, with a market capitalization of 2.2 billion Canadian dollars ($1.76 billion) – has an option to develop a 1.7-million square-foot greenhouse at a second location in the province.

Canopy has teamed with a greenhouse operator it did not identify in the release. The greenhouse company will own one-third of the new company, BC Tweed Joint Venture Inc. And Canopy will contribute CA$20 million to fund BC Tweed.

Applications to produce cannabis have been submitted for both sites.

Subject to Health Canada and other regulatory approvals, Canopy said that with “a bit of luck” product will be available from the first site when recreational marijuana is expected to be legalized on July 1, 2018.

When certain milestones are met, the partner will receive 310,316 shares of Canopy and a further CA$2.75 million of shares.

BC Tweed has agreed to lease the initial greenhouse facility from an affiliate of the partner, and has an option to acquire the property.

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One comment on “Canopy expands to BC with plans for large marijuana greenhouse
  1. Brett Roper on

    Too Many LP’s = Potential Oversupply and Adult Use Consumer Win?

    As I read these updates on the Canadian LP marketplace and … 1. do my best to add up the millions and millions of SF potentially coming online and … 2. look at the current adult population of Canada and … look at the fact that there appears to be a very robust black or grey market presence that has continued to deliver cannabis outside of the LP network to consumers and … 3. look at the potential compression in the supply chain 12 to 18 months down the road … I see what may be a trend similar to what has happened in Colorado since legalization, oversupply and price pressures.

    Colorado has generally has been a free market economy in that if you can follow the rules and produce reasonable quality tested products for the marketplace, you could be in the Cannabis business but … since Adult Use (please quit calling it recreational as I recall my only recreational beer experience my freshman year college as only a blur and missing the first two days of classes … it is as much recreational as alcoholic beverages are and we call them adult use products) came online back in 2014, we have seen a steady decline in the wholesale as well as retail pricing of Cannabis related products which for the most part represents drops of at least half of more. Wholesale flower is down to less than $3 US a gram and retail down in most cases to $99 ounces or somewhere around that price.

    I think Canada, just like precursor examples such as Colorado will likely follow a similar path and that in some instances, the Black and Grey markets will survive and possible thrive due to no taxation and testing requirements. By the way, this trend should impact virtually any state expanding to an Adult Use marketplace over time. Not everyone can become a Pot Millionaire or Barron.

    Don’t get me wrong in that there are lots of good Canadian LP’s out there, working hard to produce quality products for Canadians and other abroad but I think reality will eventually put on the brakes insomuch as value and profits are concerned.

    One person here in Colorado (an ex-grower) told me some time back it was easy to make a profit when wholesale pounds were priced at $2,500, $3,000 and higher. Now that it is down to something closer to $1,200 and you still have to pay several hundred dollars of that value in taxes, not so much.

    Best of fortune to our Canadian counterparts!

    Reply

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