Christina Lake Cannabis Corp. has acquired ownership of outdoor cultivation facilities in Midway, southern British Columbia, from an unidentified privately owned corporation for 3 million Canadian dollars ($2.2 million).
With the acquisition, Christina Lake Cannabis (CLC) expands its licensed outdoor cultivation footprint by approximately 100 acres, the company announced Monday.
The company financed the acquisition through the issuance of a secured convertible promissory note, which bears interest at a rate of 10% for Year One, 15% for Year Two and 20% per year for the remaining three years.
Separately, the company said it plans to complete a non-brokered financing with gross proceeds of up to CA$2.5 million.
Christina Lake said it will issue notes on essentially the same terms as those issued to finance the acquisition.
Before the acquisition, Christina Lake said it had a 32-acre property with nearly 1 million square feet of outdoor grow space as well as offices, propagation and drying rooms, research facilities and a structure dedicated to processing and extraction.
The company said the first 80-acre crop will be planted this spring.
Christina Lake said it plans to expand to the full 100 acres in 2025.
The company said its focus is on the production of high-quality extracts and distillate for its business-to-business client base with strains specifically developed for outdoor cultivation.
“We are expanding our growing capability to meet rising customer demand,” CEO Mark Aiken said in a statement before the deal was completed.
“The increased capacity is a catalyst for robust topline growth and improved profitability by harnessing economies of scale.”
The CEO said the company has had to supplement its own cultivation with tens of thousands of kilograms of biomass from the wholesale market.
“The Midway acquisition secures our supply chain providing CLC with cost certainty and solid control over input quality.”
The acquisition also comes with approximately 19,000 kilograms (41,887 pounds) of biomass.
The Midway property has a total of 342 acres, with more than 100 acres of space licensed for cannabis cultivation.
In an investor presentation on its website, the company said outdoor cultivation has a much lower capital and operating cost structure compared to indoor and greenhouse production.
Shares of Christina Lake are traded on the Canadian Securities Exchange as CLC.