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Delta 9 Cannabis Leaps Forward in Canadian Market

Ryan Allway

March 23rd, 2018

Exclusive, News, Top Story

As full legalization of cannabis throughout Canada nears, licensed producers are increasing production and positioning themselves in provincial markets to take advantage of the increased demand. Delta 9 Cannabis Inc. (TSXV: NINE), the fourth licensed producer in the country and the only Manitoba-based LP holding a sales license, recently announced an agreement allowing the company to dramatically expand its production capacity over the next couple of years. Combine this with the news that Manitoba recently granted Delta 9 conditional approval for one of only four retail cannabis licenses in the province, and a picture of a potentially dominant player in the oft-overlooked prairies of Canada emerges.

Expansion Plans

Delta 9 currently operates an 80,000 square foot production facility, leasing both the land and the building in East Winnipeg, Manitoba. Part of the new agreement is a five-year lease with an option to purchase the existing facility for $6.25 million. The company anticipates exercising this option and purchasing the building in the next several days, a move which would provide stability while adding an asset to Delta 9’s books.

Additionally, Delta 9 now has the option of purchasing three buildings on an adjacent piece of land, totaling approximately 100,000 square feet of new production space with 47 acres of industrial land for future expansion. Purchase price would be $6.5 million, and the buildings would require a minor retrofit to meet Health Canada standards. Delta 9 anticipates purchasing these buildings following the acquisition of the original production facility.

Upon completion of the retrofit and necessary approvals, Delta 9 expects production levels to reach approximately 17,000 kilograms/year by the end of 2019. The company maximizes production space with its modular grow pods, stackable containers that also serve to limit crop loss in the event of disease or contamination. Delta 9 also takes advantage of Manitoba’s relatively low power costs combined with inexpensive labour to help increase margins.

Supply and Demand

Delta 9 currently sells all the cannabis it produces, to thousands of medical patients. The company even operates its own medical outlet, the Delta 9 Lifestyle Cannabis Clinic in Winnipeg. A national distribution agreement with Canopy Growth Corp. further widens the company’s reach, with its craft grown strains offered in Canopy’s Tweed Main Street online store. All of that is an excellent foundation, and Delta 9 plans to build a whole lot more on top of it.

The Manitoba Liquor and Lotteries Corporation estimates the retail market for Manitoba alone at somewhere between $300 million and $500 million per year, and the government is only allowing four groups to establish sales operations there. Delta 9, in partnership with Canopy Growth, is one of those four groups and already has a leg up on the competition with its existing Winnipeg outlet. To ensure adequate supply for the new market as it ramps up its own production, the company recently signed an agreement with Alberta-based Sundial Growers to provide up to 5,000 kilograms of dried cannabis and derivatives.

“We’ve committed to producing a baseline amount of product for the Manitoba market, and we are confident we can achieve those numbers,” said CEO John Arbuthnot. “However, we would like to exceed those projections in order to not only meet demand in Manitoba , but also meet or exceed our commitments to national sales under our CraftGrow agreement with Canopy Growth.”

Looking Ahead

While the retail rollout in Canada proceeds in legislative fits and starts, the national and provincial governments remain committed to full legalization in the very near term. Delta 9 Cannabis appears well positioned, both through its own place in the Manitoba market and through partnerships that provide national exposure, to capitalize on the vastly expanding legal cannabis market. Watch for further developments as legalization nears and Delta 9 continues its anticipated growth trajectory.

For more information please visit the company website at https://www.delta9.ca/

Disclaimer

The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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