Village Farms is getting into marijuana production. The company made an official announcement of a new joint venture agreement with Emerald Health Therapeutics, which will convert an initial 25 acres of their Ladner, B.C. greenhouse facility into a state of the art glasshouse for the annual production of 75,000 kilograms medical, and if permitted by applicable law, recreational marijuana for the adult-use market.Village Farms, currently one of North America's largest growers of greenhouse produce, says that the launch of the joint venture is a transformational opportunity to grow 'a substantially more profitable agricultural product'. "Based on our conservative market pricing forecasts and yield projections, conversion of our Canadian greenhouse facilities to cannabis production could generate revenue of 10 to 15 times that of our current Canadian vegetable production with EBITDA margins potentially expanding to more than 50% compared with our current Canadian vegetable margins", Village Farms CEO Mike DeGiglio said.
Village Farms CEO Mike DeGiglio speaking in April 2016 at the Indoor Ag-Con.
B.C.-based Emerald Health Therapeutics holds a license to cultivate and sell medical cannabis flower and oils out of its facility located in Victoria. By teaming up with Village Farms, the joint venture aims to become the lowest-cost, highest-quality cannabis producer in Canada, with a targeted production cost of less than 1.00 Canadian dollar per gram.
The transformation of the 25 acres in Ladner is the first step of the new partnership. The potential conversion of all of Village Farms' Delta, BC greenhouse operations, if the applicable options were exercised, would conservatively be expected to yield approximately 300,000 kg of cannabis annually. Village Farms and Emerald believe this has the potential to fill a substantial portion of the potential Canadian production gap for both medical and non-therapeutic adult-use cannabis.
Village Farms' move into the cannabis space does not come as a complete surprise. In February last year, CEO Mike DeGiglio already expressed interest in this new 'cash crop' during a television interview with thestreet.com. "We will be building greenhouses, expanding our distribution model where we market for our partners who grow and we will also look at alternative crops," he then said.
The Village Farms locations in Ladner are state of the art glasshouses that use specially developed technologies to use methane gas from a local landfill to generate heat and electricity to grow tomato crops.
