As cannabis companies ratchet up operations in preparation for recreational legalization, one Canadian LP is setting its sights farther past the horizon. While the Cannabis Act in its current form only allows for cannabis to be commercially farmed indoors and in greenhouses, United Greeneries is making a strategic bet that traditional outdoor farms will also become a ubiquitous component in the domestic cannabis sector, even if not included in the initial legalization bill.
The ante for that bet comes in the form of a 398-acre land package in British Columbia, which UG has purchased with the eventual goal of preparing for annual crops of outdoor cannabis—to the tune of an estimated 50,000 kilograms of dried, market-ready cannabis anticipated from the first 140-acre harvest once permitted by regulations, and with the potential for more than double that after operations are scaled to use the remainder of the property.
“Historically, this isn’t a plant that has needed to be grown indoors,” offered Colin Clancy, VP of Investor Relations and Communications at United Greeneries. “It only really moved indoors because of the need for it to be kept hidden, for legal reasons. But it’s a plant that, under the right conditions, grows really well in an outdoor environment.”
While the conditions throughout most of Canada are less than ideal for growing cannabis, areas of B.C. present a unique microclimate that provides optimal conditions similar to those found in northern California, a region that has become synonymous with outdoor growing.
According to Clancy, United Greeneries has reached board approval to develop plans working toward the 2019 growing season.
“We understand that there’s a very high risk the regulations won’t change in the short term,” Clancy emphasized, “but we believe that in the long term it will shift.”
That belief is bolstered by indications from Health Canada, released alongside the public consultation in November of 2017, which proposed that the regulations would permit both outdoor and indoor cultivation of cannabis under all four classes of commercial cultivation licence.
Whether short—or long—term, if UG’s prognostication is correct, their bet stands to pay off in spades. The cost per gram savings for outdoor production vs. indoor are significant—in addition to avoiding the fiscally intense burden of lighting and environmental control, outdoor cannabis farms also have only two labour intensive periods in any given year (planting and harvest time), with minimal staffing needs for the rest of the year.
According to Clancy, the scale of UG’s anticipated outdoor operation has not yet been attempted by anyone within a regulated legal environment.
“There are quite a few logistical issues around this,” he suggested, “even with things as simple as drying the harvest. But it’s all very achievable.”
To wit, Clancy said UG has already brought in consultants from California and Spain to confirm the arability and efficacy of the proposed land parcel, and to provide guidance and the benefit of experience.
Meanwhile, back at the ranch…
While United Greeneries will have to wait for the winds of legislation to shift for their outdoor gambit to pay off, the company is hedging its bets by expanding its existing operations to increase production of indoor medical cannabis for ACMPR customers.
Although initially planned as a greenhouse adjacent to their existing indoor production facility in Duncan, B.C., United Greeneries elected instead to base the expansion in the nearby town of Chemainus, at a property the company’s VP of Investor Relations said is better suited for rapid scaling.
“We’ll be able to build an 8,000 kg [per harvest] capacity structure this year, for approximately the same capital outlay,” VP Colin Clancy told Lift. “We initially planned $9 million to get the Duncan facility up to 8,000 kilograms, and we’ll be able to do the same with this new facility as well, while producing higher quality product.”
Clancy describes that difference in quality as a contrast between extractionable grade and premium, craft grade flowers.
Another chief benefit of the Chemainus site is 8 acres of land ideal for scaling. According to Clancy, if fully utilized the site could produce as much as 35,000 kilograms of market-ready, high-grade cannabis per harvest, although he states the current focus is to build toward an output of 10,000 to 20,000 kg per harvest in the next one to two years.
In the meantime, United Greeneries is preparing for the launch of the new expansion by creating plans to repurpose a segment of its existing Duncan facility to be used as a temporary nursery for the Chemainus facility, with the intent of having a crop ready to begin flowering as soon as the new facility is open for business.
United Greeneries anticipates its new expansion to be completed and in operation later this year.
Featured image via GoToVan.