Harvest One Cannabis Takes a Faster Route to Commercialization
Ryan Allway
November 30th, 2017
Exclusive, News, Top News
Canada’s cannabis industry is expected to become a $22.6 billion industry over the coming years, according to Deloitte, driven by the legalization of adult-use marijuana next year. With many analysts expecting a production shortfall, many licensed producers are accelerating their development timelines to meet growing consumer demand. This has created many opportunities for investors in the space to profit from favorable supply and demand economics.
In this article, we will look at Harvest One Cannabis Inc.’s (TSX-V: HVST) new plans to lease and retrofit an existing timber facility to accelerate its cannabis commercialization timeline.
New Letter of Intent
Harvest One Cannabis recently announced that its wholly-owned subsidiary, United Greeneries Ltd., has entered into a letter of intent with a third party for the lease of a property in Chemainus, BC to accelerate and expand production capacity. As a previous industrial lumber kiln drying plant, the facility has an industrial power supply and usable building envelopes. The team has already begun detailed design work and commenced licensing integration activities.
“The Chemainus Facility will allow United Greeneries to capitalize on supplying the upcoming recreational market in Canada with large volumes of high quality dried cannabis buds,” said Harvest One Cannabis CEO Andreas Gedeon. “The company is committed to aggressively pursuing the opportunities at hand and to continue its successful approach of providing shareholders with targeted and substantial value in this thriving industry.”
Management believes that it will be able to commence cultivation activities next year with an initial annual capacity of approximately 8,000 kilograms. In terms of capital expenditure, the team anticipates covering the retrofitting costs with its current cash balance without need for additional financing. The LOI also provides UG with a lease option on a further eight acres on the site, which could be developed to ultimately produce more than 35,000 kilograms per year on a full build out and expansion basis.
A Better Alternative
Harvest One Cannabis’ previously planned Duncan facility expansion would have been a greenhouse operation that would have taken longer to commercialize than the Chemainus Facility. In addition to its shortened timetable, the Chemainus Facility will be an indoor growing environment capable of producing higher quality cannabis instead of extraction grade greenhouse cannabis. This could open the door to higher margin opportunities than were previously possible.
The Duncan facility, with its 1,000 kilogram current annual capacity, will remain as a base of operations for the company on Vancouver Island with a focus on increasing capacity through an expansion plan at the nearby Chemainus Facility. The existing facility’s proximity to the new facility is beneficial as the two locations will complement each other as United Greeneries’ business grows.
Additional Potential
United Greeneries may be focused squarely on cultivation, but Harvest One Cannabis also owns Satipharm AG to provide exposure to the medical side of the business.
Earlier this month, Satipharm AG announced positive Phase I clinical trial results in Israel using its proprietary Gelpell® technology. The results demonstrated the safety and performance of the oral capsule technology, including the effective delivery profile of cannabidiol (CBD) compound to trial subjects. The trial also highlighted the favorable bioavailability of the capsules compared to Sativex – a market leading oral cannabinoid spray from GW Pharmaceuticals plc (GWPH).
The company has since begun Phase II clinical trials to evaluate the efficacy of Satipharm’s capsules in treating refractory epilepsy in children. The completion of the Phase II clinical trial would be a major catalyst toward commercialization of the capsules. In fact, the company could become just the third company to complete Phase II clinical trials next to GW Pharmaceuticals plc and Insys Therapeutics Inc. for refractory epilepsy in children.
Looking Ahead
Harvest One Cannabis Inc. (TSX-V: HVST) represents a compelling opportunity in the cannabis industry given its dual approach to cultivation and medical research. In the cultivation space, United Greeneries’ decision to lease a new facility could accelerate its commercial timetable as Canada prepares for adult use legalization later next year.
For more information, visit the company’s website at www.harvestone.com.
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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