Emerald Health Plans for 1,000,000 Square Feet of Cultivation Space by End of 2018

Ryan Allway

December 6th, 2017

Exclusive, News, Top News

Canada’s cannabis industry is expected to reach $22.6 billion over the coming years, according to Deloitte, following the legalization of adult-use cannabis next year. Many licensed producers have responded by dramatically increasing their production capacity, but Emerald Health Therapeutics Inc. (TSX-V: EMH) (OTCQX: EMHTF) stands out with plans to have more than one million square feet of cultivation space operational by the end of next year.

In this article, we will take a closer look at the company’s recent preliminary approvals from Health Canada, its Pure Sunfarms partnership, and what sets it apart from other licensed producers.

New Facility Approved

Emerald Health recently announced that the first 75,000 square foot of its Metro Vancouver greenhouse facility has met the requirements of a preliminary paper-based review of Health Canada’s Office of Medical Cannabis (OMC), which puts it on track to move into the cultivation phase next year. The OMC confirmed satisfactory provision of information regarding the security plan, record keeping and tracking systems, QA reports, and security clearances among key personnel.

“As with Health Canada’s fast paper-based review of our Pure Sunfarms facility, we appreciate their quick preliminary review of our licensed producer application for Emerald Health’s fourth site,” said CEO Chris Wagner in a recent press release. “With significant, secure supply from our large-scale Pure Sunfarms partnership and Emerald facilities, and our value-added product development plans, we intend to be well positioned for growth in the adult use market.”

The new facility will consist of two 75,000 square foot modules of hybrid indoor-greenhouse space expected to be completed by summer 2018. By the end of 2018, management anticipates expanding the facility to a total of over 500,000 square feet of cultivation space with corporate offices and additional space for extraction of oils and processes to create other value-added products. Situated on a 32-acre site, this facility can be expanded to one million square feet.

Pure Sunfarms Partnership

Emerald Health partnered with Village Farms (TSX-V: VFF) earlier this year to retrofit its existing 25-acre 1.1 million square foot greenhouse being used to grow tomatoes to cultivate cannabis, with the goal to be a large-scale, low-cost producer. In September, the partnership, called Pure Sunfarms, submitted an application to Health Canada to become a cannabis Licensed Producer. Emerald Health also optioned an additional 3.7 million square feet of existing greenhouse space in the same Delta complex.

“Partnering with Village Farms, one of North America’s largest and most efficient greenhouse growers, on this tremendous opportunity, is a very exciting development for Emerald,” said Executive Chairman Avtar Dhillon, MD, in a press release at the time. “Village Farms is a global leader in greenhouse growing and, importantly, an expert in the complex matter of safety for agricultural consumables.”

Management anticipates that the first 250,000 square foot conversion of the 1.1 million square foot greenhouse will be completed in February, with a first harvest ready prior to adult-use legalization, anticipated in July of 2018. The second 250,000 square foot expansion is targeted for completion in the third quarter of 2018, which would bring the total cultivation space up to 500,000 square feet. Since it’s a 50/50 partnership, Emerald Health would essentially own roughly 250,000 square feet of production by the end of next year.

Following completion of the whole 1.1 million square foot retrofit, Pure Sunfarms has an option to similarly develop an additional 3.7 million square feet of greenhouse production area. Combined with the 1 million square feet from the Metro Vancouver campus, this puts Emerald Health at 5.8 million square feet of potential production area and among the very largest licensed producers, in terms of production potential, both in Canada and internationally.

Looking Ahead

Emerald Health Therapeutics Inc. (TSX-V: EMH) (OTCQX: EMHTF) represents a compelling investment opportunity in Canada’s burgeoning cannabis industry. With more than 750,000 square feet of cultivation space expected by the end of next year, the company will be among the largest producers of cannabis in the world. Meanwhile, its focus on product innovation through product development and clinical research will help differentiate it as the industry becomes more commoditized.

For more information, visit the company’s website or investor presentation.

Ryan Allway

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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