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Why marijuana stock investors should ditch Aphria for Village Farms

Village Farms International (TSX:VFF) (OTC:VFFIF), as part of their 50/50 joint venture with Emerald Health Therapeutics, Inc. (TSXV:EMH) (OTCQX:EMHTF) announced last week the receipt of an additional amendment to their cultivation license at the Delta 3 greenhouse. The venture, which runs under the Pure Sunfarms name, now has the green light to expand its cannabis production area to 550,000 square feet, which the company expects to do by mid-October.

The expansion will make Village Farms one of the largest cannabis growing facilities on the planet, according to a statement released by the company.

“It’s a remarkable achievement to now have 550,000 square feet – half of the 1.1 million square foot Delta 3 facility – approved for production just six months since receiving the initial cultivation license,” said Michael DeGiglio, CEO of Village Farms in a statement. “I am tremendously proud of the Pure Sunfarms team.”

[More Finance: MedMen’s Florida expansion and the underwhelming promise of the “Apple store of weed”]

A relative unknown in the cannabis industry, the Pure Sunfarms venture pushed Village Farms’ stock upwards an awesome 228 percent over the last year — all the more impressive considering the volatility of the marijuana stock market for most of 2018. Compare that to Aphria Inc. (TSX:APH) (OTC:APHQF), one of the largest growers in Canada whose stock wouldn’t budge until Constellation Brands kicked market speculation into high gear with their investment in Canopy Growth Corp. (TSX:WEED) (NYSE:CGC).

Source: Village Farms Investor Presentation

All things considered, while Aphria may be ready to go right now, Village Farms has 30 years of growing behind them —at least in produce, subjectively making them the better long-term play in the marijuana stock market.

Since partnering with Emerald Health last year, investors seem to agree that the two are a great match. Village Farms International, Inc. is one of the largest vertically integrated greenhouse growers in North America. They are also one of the longest-operating, and the only publicly traded greenhouse produce company in Canada.

Likewise, Emerald Health Therapeutics with their highly experienced life sciences team is licensed by Health Canada to produce and sell medical cannabis products, and the company is gearing up in a big way also to serve the recreational cannabis market.

Meanwhile, Aphria has lost considerable standing since being forced to divest from the last of their US holdings last week. And though share prices have risen in recent weeks, they’ve not done so based on any recent accomplishments. Preferably, the market hopes to buy in somewhere before missing out on the next Constellation deal.

[Read More: Pure speculation: Aphria’s US divestiture clouds the cannabis stock market]

Meanwhile, slow and steady goes Village Farms. The addition of the 550,000 square feet of greenhouse completes Pure Sunfarms construction of their Delta 3 facility in British Columbia. They began by first converting 250,000 of the 1.1 million square foot facility after receiving their initial cultivation license from Health Canada in March. Now, the full Delta 3 space will be growing cannabis by October 17, in the state-of-the-art facility based on decades of large-scale, low-cost agricultural production expertise.

Source: Village Farms Investor Presentation

The facility has 17 individual grow rooms optimized for year-round harvesting, Sunfarms reaps over 85 cannabis harvests every year. Village Farms transferred its experienced cultivation team to the Delta facility. As such, the company plans to ramp up its production nearly seven-fold--from 8,000 kilograms of production in 2018 to over 50,000 in 2019. The year 2020 is even better with a 75,000-kilogram plan.

In addition to the 1.1 million square feet of the Delta facility, Sunfarms has an option on another 3.7 million contiguous square feet. When completed, Pure Sunfarms will have nearly 5 million square feet of cannabis cultivation.

Avtar Dhillon, Emerald Health’s Executive Chairman, also praised the progress of Pure Sunfarms: “We are pleased to see the rapid conversion of its impressive production facility. We look forward to the significant sales we expect Pure Sunfarms to generate and we support Pure Sunfarms in the distribution of its production.

Village Farms stock is not the only stock to experience sharp gains as a result of the business agreements among the three partners. Emerald Health stock is up 53 percent, and the primary catalyst has been the agreements with Village Farms.

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