GTEC Secures $13m Deal for Canopy Growth Facility

GTEC Holdings Ltd. [stock_market_widget type="inline" template="generic" color="default" assets="GTEC.V" markup="(TSXV: {symbol} {currency_symbol}{price} ({change_pct}))" api="yf"] has agreed a $13 million deal to buy a cannabis cultivation facility in British Columbia from Canopy Growth.

It will increase the firm’s annual production capacity by 28.5% to 18,000 kg of dried flower by 2020. The facility is almost completed and GTEC believes it will need to spend just $2 million extra to wrap up construction, bringing its total investment to $15 million.

“The facility has been thoughtfully designed and built-out, and is located in our own backyard,” said Norton Singhavon, GTEC founder, chairman and chief executive. “With the increasing demand of our premium flower, we look forward to further increasing our production capacity by 2020.”

Multiple Health Canada Licenses On Deck

In May, Health Canada overhauled its licensing process, requiring new applicants for cultivation licenses to have fully built and operational ready sites before they will be considered. The idea is to cut waiting times for serious operators and reduce a licensing bottleneck that has sparked problematic supply shortages across the country.

The Canopy facility in Kelowna, BC, was attractive to GTEC because it is almost fully built out. It expects to be ready to submit its application to Health Canada “in a timely manner” and it anticipates that cultivation will begin in early 2020.

GTEC has paid a deposit on the facility and the acquisition is set to close on October 15, 2019, subject to the completion of satisfactory due diligence.

It would take the firm’s cultivation area to 160,000 sq. ft. of indoor flowering space.

Earlier this month, GTEC secured a license to cultivate cannabis at its Grey Bruce Farms facility in Kincardine, Ontario. It owns a separate facility called Tumbleweed Farms in British Columbia, and it is edging closer to gaining a sales and manufacturing license at its Alberta Craft Cannabis facility after completing a Health Canada inspection last month.

The recent activity left it with a forecasted capacity of 14,000 kg by 2020, and this deal for Canopy’s expansion facility will bring it up to 18,000 kg.

GTEC has also outright stated they have no fake walls set up and all operating grow rooms are licensed. Hopefully, this lets investors and consumers sleep easy at night.

GTEC was founded in Kelowna, British Columbia, in 2017, with the aim of cultivating, distributing and marketing “ultra-premium”, indoor-grown cannabis across Canada. Last month it appointed Jurgen Schreiber, the former chief executive of Shoppers Drug Mart and former chairman of Aldo, to its board to help fuel further growth.

 

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GTEC Holdings is a market awareness client of Capital 10X.

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 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. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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