Tilray to invest CA$30 million to create one of Canada’s largest cannabis facilities

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By Matt Lamers

Canadian medical marijuana producer Tilray will invest 30 million Canadian dollars ($24 million) to convert an Ontario pepper farm into one of the nation’s largest MJ production facilities.

The project’s initial phase will give Tilray a fivefold increase in production capacity to over 40,000 kilograms a year by the end of 2018.

The boost in output will allow the company to serve Canada’s rapidly expanding medical marijuana program and, ultimately, the nation’s new recreational market.

Full rollout of the Ontario facility, in the township of Enniskillen, ultimately would see Tilray’s annual production rise to about 100,000 kg over the next few years.

In a news release, Tilray said the project is expected to generate up to 250 full-time jobs. Tilray said the facility will allow the company to also serve the European Union, Australia, New Zealand and Latin America.

Tilray, which is headquartered in Nanaimo, British Columbia, is owned by Seattle-based Privateer Holdings.

Under the deal, Tilray will lease a 100-acre property from Enniskillen Pepper Co. for three years before executing a purchase agreement.

The Enniskillen property includes 13 acres of existing greenhouse space. That space, currently devoted to pepper cultivation, will be retrofitted into 10 acres of cannabis production.

Tilray founder and CEO Brendan Kennedy told Marijuana Business Daily the arrangement leaves room for significant expansion beyond the initial phase.

“Our first phase will be to use 10 acres of that greenhouse and we’ve designed a second phase with an additional 16 acres, which gets us to about 30 acres total and over 1 million square feet,” said Kennedy, who also is Privateer’s CEO.

“That was an important aspect of our site selection, because we’ve said that we’d never buy a property that you couldn’t get to a million square feet of production space on.”

The facility, Tilray’s second, will be able to generate 43,000 kilograms of cannabis annually when it’s fully operational by the end of next year.

Initial production is expected to begin before next summer. Tilray’s flagship CA$30 million facility in Nanaimo opened in 2014 with a production capacity of 8,000 kilograms of MMJ per year.

Implementation of the second phase will depend on increased demand from both the MMJ market and the anticipated launch of the adult-use market in Canada next summer.

The market for medical cannabis has seen explosive growth over the past couple of years, with dried MMJ sales to registered clients quadrupling to nearly 6,000 kilograms in the first quarter of this year from two years ago and sales of extracts rising from almost nothing one year ago to 5,600 kilograms in the same period.

Over the past few months, Canada’s licensed producers have been rolling out plans for significant production expansion to meet demand from anticipated legalization starting next summer.

About 90 minutes south of Enniskillen, another Canadian LP, Aphria, is partnering with an upstart producer to build a 1 million-square-foot MJ greenhouse in Leamington.

“As governments around the world increase access to medical cannabis, and as Canada prepares to legalize and regulate cannabis for responsible adult consumption, this investment will enable us to serve the rapidly expanding global market for quality-controlled, rigorously tested cannabis products,” Kennedy said in the release announcing the investment.

Matt Lamers can be reached at mattl@mjbizdaily.com

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