Why Location Matters in Cannabis
October 5th, 2020
App, Exclusive, News, Top Story
The global cannabis industry has projected to be worth $73.6 billion by 2027, according to Grand View Research, which represents a blistering 18.1% compound annual growth rate. While cannabis has historically been grown indoors, outdoor cultivation has become increasingly popular over the past couple of years.
Let’s take a look at the benefits of outdoor cultivation and why the soon-to-go-public Christina Lake Cannabis Corp. (CSE: CLC), which recently began trading on the Canadian Securities Exchange, is well-positioned to capitalize on these benefits.
Indoor vs. Outdoor Cultivation
Christina Lake Cannabis’ 2020 Outdoor Grow
The debate between indoor and outdoor cultivation has been going on for years.
Indoor cultivation enables companies to fine-tune the environment and grow year-round, but it requires a significant capital investment and has higher ongoing costs. In terms of environmental costs, a single gram of indoor cannabis requires 10 pounds of carbon dioxide due to the significant energy requirements for lights and heat generation.
Outdoor cultivation involves significant lower capital investment—since there’s no building required—and sharply lower ongoing operating costs. These economics enable companies to rapidly scale up to meet demand. While outdoor cultivation uses slightly more water, these environmental costs pale in comparison to the high cost of indoor cultivation.
There are also quality differences between indoor and outdoor cannabis. While indoor cultivation is more tightly controlled, there’s evidence that full-spectrum sunlight improves overall quality compared to artificial lights that have a limited spectrum. The product is closer to nature than indoor products that are more finely tuned to meet certain demands.
Investing in the Outdoor Advantage
Canada legalized outdoor cultivation in mid-2018 and several licensed producers began expanding outdoor—but few were built for it from the start.
Christina Lake Cannabis Corp. (CSE: CLC) was built on the idea that outdoor cultivation represents the future of the cannabis industry. With proprietary strains customized for its local outdoor climate, the company planted over 22,500 clones and seedlings in individual pots across 18 acres over the 2020 spring growing season.
Using remote-controlled drones, the company conducts aerial surveillance for quality assurance several times per day. These drones capture real-time video and use sophisticated heat sensors to gauge the health and hydration of each plant. The data is wirelessly transmitted to headquarters where the team can immediately act upon any concerns.
The company has already harvested more than 33,000 pounds or 15,000 kilograms and anticipates a total initial harvest of at least 33,000 pounds or 22,500 kilograms. During the 2021/2022 season, management expects to significantly increase that footprint by 20 to 25 percent by growing on a 99-acre plot that’s directly adjacent to its current facility.
A maturing plant at CLC’s outdoor operation
Ideal for Low-Cost Extracts
Outdoor cultivation is uniquely suited for cannabis extracts given the full-spectrum nature of the products and the lack of precise environmental controls.
Christina Lake Cannabis intends to process its ultra-low-cost outdoor cannabis into high-value full-spectrum extracts to maximize revenue and profitability. Using the Vitalis R200 extractor, the company is able to turn cannabis crop into winterized THC oil, as well as isolate terpenes (an increasingly sought-after compound) to create compelling products.
The Vitalis extraction technology also enables the company to expand into supplementary hemp production in the form of toll processing while creating products that are well-positioned to achieve GMP certification, enabling it to sell into European end markets.
After raising C$17 million in funding, the company has ample capital to complete its initial harvest and begin its extraction efforts. The reserves also enable the company to time sales of processed plants based on favorable opportunities in seasonal or industry pricing rather than having to sell products at prevailing market prices.
Outdoor cultivation has several important advantages over indoor cultivation, including lower cost, efficient expansion and full-spectrum quality. Christina Lake Cannabis (CSE: CLC) intends to capitalize on these characteristics to realize these benefits and become a low-cost producer of both dried cannabis and extracts.
The company recently went public on the Canadian Securities Exchange (CSE) under the ticker symbol “CLC”, creating an opportunity for investors to participate in its growth story. Those interested in exposure to low-cost outdoor cannabis cultivation in Canada may want to take a closer look at the stock as a way to diversify cannabis exposure in their portfolios.
“It was two years ago that our team set out to create a large-scale operation for outdoor cannabis cultivation and extraction,” said CEO Joel Dumaresq. “With our first harvest underway, we look forward to sharing our initial operating results, and building upon that momentum as we seek to establish our reputation as a leader in the Canadian cannabis industry.”
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