Many Canadian companies have entered into partnerships, joint ventures, and other agreements to expand their business footprint in anticipation of the October 17 date when nationwide legalization goes into full swing. Village Farms International, Inc. (TSX:VFF) (OTC:VFFIF) and Emerald Health Therapeutics, Inc. (TSXV:EMH) (OTCQX:EMHTF) are no different and have formed a 50/50 joint venture called Pure Sunfarms, for large-scale cannabis production.
Health Canada just granted Pure Sunfarms a cannabis sales license, and the company will now begin selling dried cannabis from its ever-expanding product line and inventory of high-quality merchandise. In fact, Pure Sunfarms will sell product to Emerald, per a supply agreement that was previously announced by the companies. Pure Sunfarms will also meet demand from several other licensed producers, and they also plan to sign supply agreements with government distributors in the Canadian provinces. When Canada passed its sweeping national legislation, the country left the details of the cannabis law, such as the age of purchase and selling and growing details up to the provinces.
At the heart of the venture is the 1.1 million square foot Delta 3 greenhouse facility located in British Columbia. The space is being physically converted from a tomato growing facility into one of the largest Canadian cannabis growing operations in existence. The conversion of the first quarter of the greenhouse (225,000 square feet) was completed in February as a milestone to then apply for the readiness documentation with Health Canada. Commercial scale production began in May. Incredibly, the full 1.1 million square feet is expected to be in full-scale production by the end of 2018. Even better, the effort is on time and on budget. When everything is complete, Pure Sunfarms will be one of the largest growing facilities in the world.
Village Farms CEO Michael DeGiglio praised Pure Sunfarms in a recent interview with Cannabis Financial Network: “Pure Sunfarms continues to achieve its milestones on or ahead of schedule, and has transformed the Delta 3 facility from growing and selling tomatoes to growing and selling cannabis in just seven months.”
The new sales license had a very rapid turnaround and is a major step in helping Pure Sunfarms become a vertically integrated supplier. DeGiglio says the venture will now move forward with aggressive product development and branding. Emerald CEO Chris Wagner says that the license gives Pure Sunfarms access to established wholesale and provincial agreements and that Pure Sunfarms is “well prepared for a rapid sales ramp-up in the coming quarters.”
The Pure Sunfarms venture is an amazing accomplishment that will drive value for itself but also its joint venture partners. Village Farms is already one of the largest North American greenhouse growers. The vertically integrated facility is one of the longest in operation in Canada, and currently represents the only Canadian publicly traded greenhouse produce company. The company runs large-scale Controlled Environment Agriculture (CEA) greenhouses in British Columbia and Texas, allowing them to grow and distribute consistently high-quality produce 365 days a year. Their supply chain includes both U.S. and Canadian national grocer chains.
Their partner in the venture, Emerald Health Therapeutics, is already a licensed Canadian medical cannabis producer. Emerald sells both dried cannabis and cannabis oils for medical applications and is in preparation to also begin serving the legal Canadian recreational market in October. Emerald is also in the growing business; they own Agro-Biotech’s 75,000 square foot indoor cannabis growing facility in Montreal and plan to add a half million square foot greenhouse in Vancouver as well. Emerald is focused on the development of nutraceutical and pharmaceutical cannabinoid products.
With the separate talents of both Village Farm and Emerald Health, as well as the amazing progress of Pure Sunfarms, this trio seems well on its way to being a major player in Canadian cannabis for the long run.