The Tomato Capital of Canada could become the Cannabis Capital of Canada thanks to a new joint venture that might create two million square feet of greenhouse space for growing marijuana in Leamington.
Leamington-based Aphria — the local cannabis king which will complete a million square feet of marijuana greenhouse space by next August — on Wednesday announced a partnership with a company investing in the global pot market.
Aphria Inc. bought $2 million of shares in the Toronto-based Nuuvera Corp. Nuuvera in turn bought 100 of 200 acres of land north of Leamington, on Mersea Road 8 west of Highway 77, from Aphria for $4 million. Nuuvera’s hope: to build its own million-square-foot marijuana greenhouse over several years, with construction possibly starting in late 2018 or early 2019.
As well, Aphria will collect five cents a gram — possibly as much as $10 million a year — to run Nuuvera’s pending Leamington facility and share its intellectual property on how best to grow weed in a greenhouse.
Leamington-based medical marijuana producer Aphria Inc. helped open the markets Friday, April 7, 2017 in Toronto.
Meanwhile, Leamington Mayor John Paterson said the municipality has fielded even more queries from other companies interested in setting up local marijuana grow operations.
“We have been meeting with several other large marijuana producers as well, who are looking quite seriously at Leamington,” Paterson said Wednesday. “I don’t want to say the more the merrier, but if this area becomes the hub, that just makes it all the better for the municipality of Leamington.”
Tomato farming took a hit in 2014 when Heinz, which had made ketchup and other food products in Leamington since 1909, left town. But the area greenhouse industry is growing like a corn stalk, with cannabis as the most recent star crop.
Aphria CEO Vic Neufeld is shown on Feb. 18, 2016 in Leamington, Ont. Dan Janisse / Windsor Star
So could Leamington become the Cannabis Capital of Canada?
“We joke about that, yes,” Paterson acknowledged. “But we’re becoming known as the Greenhouse Capital of Canada. Between Leamington and Kingsville, this is the greatest concentration of acreage under glass anywhere in Canada. So to add cannabis to the greenhouse industry is a wonderful thing.”
Paterson has heard complaints from some citizens about smaller marijuana-production facilities, due to odour and the perception of security risks. But he said state-of-the-art marijuana facilities offer a safe, clean industry and good-paying jobs with increased taxes to boot.
Aphria CEO Vic Neufeld called the new partnership with Nuuvera good for his company and the region.
“The alliance couldn’t be better,” Neufeld said. “They’re going into international markets that are not part of our strategy right now, and they know we’re the growers, not them. So the partnership couldn’t be better.”
Aphria currently has 140 employees at its 52-acre Talbot Street West campus in Leamington. After completing its highly automated million-acre project next year, the company’s workforce will surge to 400 employees. Roughly the same number of workers likely would be required at a Nuuvera facility if it ends up being about the same size.
For the first few years, however, Aphria will provide marijuana to Nuuvera, as it tries to break into international markets loosening restrictions on medical marijuana. It all depends on upcoming demand overseas, of course. But Nuuvera already has licences or is working on licences in five countries: Israel, Switzerland, Germany, South Africa and Costa Rica.
After its expansion is complete next August, Neufeld said Aphria will produce about 100,000 kilos of marijuana a year, in flower, dried bud and oil form.
Right now Aphria only sells for the medical marijuana market, at about $7.50 to $8 per gram — with what Neufeld calls industry-leading all-in costs of $1.67 a gram. But next year, if the Trudeau government legalizes marijuana for adult recreational use as announced, the market will expand like a cloud of smoke. And prices should drop.
A dump truck unloads dirt near the Aphria company in Leamington on April 21, 2017. The medical cannabis grower is working on a multi-million dollar expansion. Dan Janisse / Windsor Star
Setting itself up to dip into a potential international market only sweetens the pot.
“It’s exciting,” Neufeld said. “The fact that I have aligned Aphria with the Nuuvera management team, with their vision and ability to connect with regulators in other countries, to be part of the supply chain, I’m a winner all around.”
Neufeld says Aphria succeeds in a few ways. One, it is spending $24 million on automation, helping curb costs. Two, it uses efficient Dutch-style greenhouses that are higher with better airflow. And three, it basks in the Leamington sun.
“People are really watching the footsteps of Aphria and trying to mimic us,” said Neufeld, who adds that electricity costs stay low thanks to solar heat. “But our advantage is we’re in Leamington, in the sun parlour of Canada, where we get more sunlight hours than any other part of the country.
credit:420intel.com