AgraFlora Boosts Stake in Cultivation Venture

zenabis-global-stock-alberta-deal-zena

AgraFlora has increased its share in one of Canada’s largest cannabis cultivation facilities to 70% after acquiring a range of assets from Organic Flower Investments Group.

It previously owned 50% of Propagation Services Canada, a joint venture that controls a 2.2 million sq. ft. greenhouse complex in Delta, British Columbia. The facility is expected to yield 250,000 kg of cannabis flower in 2020 once retrofitting is complete and the correct Health Canada licenses are secured.

Houwelings Group, a large-scale tomato producer, owns 30% of PSC and Organic Flower Investments owned the remaining 20%. AgraFlora has now reunified a 70% interest in the facility and that would entitle it to 175,000 kg of cannabis flower in 2020.

It also has a licensed indoor cultivation operation in London, Ontario, called AAA Heidelberg, and it claims it is on course to become Canada’s fourth-largest cannabis producer in 2020, sandwiched in between Aphria and Tilray.

New Leader Hails Important Milestone

Chief executive Derek Ivany maintained that the firm was mispriced as its market cap is tiny compared to companies like Tilray and Aphria. It was trading at $0.28 when the year began, and it reached $0.79 by Mar. 21, yet it has since decreased again and it opened at $0.40 today.

Ivany has now been replaced by Brandon Boddy, a co-founder of Auxly Cannabis Group, which reached a market valuation of more than $1.8 billion at its peak. He has been tasked with ramping up its domestic cultivation activities and expanding further into international markets.

Boddy said today’s deal is an important milestone in AgraFlora’s mission to become one of the world’s leading cannabis companies, although not everyone is convinced.

“This truly is the penultimate step involved with elevating AgraFlora to a premier vertically integrated cannabis company,” said Boddy. “The addition of Organic Flower’s Canadian assets under the AgraFlora corporate flag will signal to the marketplace the emergence of a new Tier 1 Licenced Producer, as the industry progresses towards the next phase of global cannabis normalization,”

He added that it is a “watershed acquisition” that leaves it primed for growth in the European Union.

Extensive European Distribution

AgraFlora now claims to have exclusive trans-European distribution comprised of 80,000 retailers and pharmacies, spanning 16 countries, following the transaction with Organic Flower Investment. AgraFlora will issue 1.15 common shares in capital of AgraFlora for each outstanding share of Organic Flower.

It now controls a joint venture with a chocolate producer, a Canadian CBD topicals and cosmetics firm, 76 acres of agricultural land in New Brunswick, a cannabis research license and industrial hemp license from Health Canada, a supply agreement with a bottler for oils, and 57 registered trademarks.

AgraFlora has an agreement in place to sell 100,000 kg of dried cannabis flower to International Cannabis Corp. over the next five years, subject to approval of cultivation and sales licenses from Health Canada.

Last week it sold its Colombian assets to ICC to streamline its operations. It also has an agreement with Dixie Brands Inc that aims to crack the lucrative European market.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live.

Leave a Reply

avatar
  Subscribe  
Notify of