As the COVID-19 pandemic forces many cannabis cultivators to scale back production, Pure Sunfarms Corp. is pushing forward to expand its growing facilities.
On Monday, the joint venture between veteran vegetable grower Village Farms International, Inc. (NASDAQ and TSX: VFF) and medical cannabis company Emerald Health Therapeutics, Inc. (TSX-V: EMH), received its cannabis cultivation and sales licence for its Delta 2 facility in Delta, British Columbia.
The initial licensed area is just one small part of the 1.1 million square foot production facility, which will allow the company to expand capacity as needed through successive licensing amendments, Pure Sunfarms said in a statement. The Delta 2 facility sits adjacent to the company’s other 1.1 million square foot production facility, Delta 3.
The Delta 3 facility produces an annual 75,000 kilograms of dried cannabis, the company said in a press release last July. The Delta 2 facility was designed to double that.
“Pure Sunfarms expects to complete its first harvest at the Delta 2 facility by mid-2020, ramp to full run rate annual production by the fourth quarter of 2020, and operate at full production of 75,000 throughout 2021,” the company said in the July 2019 statement. So far the COVID-19 pandemic doesn’t seem to have disrupted that timeline.
Delta 1, the big sibling of the trio, sits at 2.6 million square feet and is adjacent to the other two facilities. It’s currently owned by Village Farms and is used to grow produce, but that crop could change. Pure Sunfarms has until Sept. 28, 2021, to decide if Delta 1 should be converted to cultivate cannabis too, the company said in an April 2019 press release. Should it exercise that option, Pure Sunfarms would have 4.8 million square feet of production space which could produce an annual 330,000 kilograms of dried cannabis, the company said.
Pure Sunfarms reports fifth consecutive profitable quarter
It’s been a brutal year for the cannabis industry, with investor trust and capital drying up before the novel coronavirus was even named. From November to March, Pure Sunfarms was also in the middle of a spat between its parent companies. But in early March, Village Farms and Emerald Health settled the dispute and Village Farms was given majority share of the joint venture.
Village Farms CEO Michael DeGiglio remains bullish on company expansion. Pure Sunfarms needs to expand right now to be ready to meet the long-term demand for its products, DeGiglio said in Monday’s statement.
“We planned Pure Sunfarms’ capacity based on our confidence in Pure Sunfarms’ ability to capture leading market share across multiple product categories and with its consistent ranking as the top dried cannabis brand in Ontario, we are confident in the merit of these expansion plans,” he said.
As well as being a top-seller at the Ontario Cannabis Store, Pure Sunfarms is also the only public Canadian licensed producer to have five consecutive profitable quarters, DeGiglio said.
For the quarter ended March 31, 2020 Pure Sunfarms reported a positive earnings before interest, taxes, depreciation and amortization of $6.7 million with an all-in cost of cultivation per gram of $0.88 per gram. Year-over-year, the cost per gram dropped by 36 per cent, from $1.38 per gram. Company net income also rose 46 per cent to $8.6 million, up from $5.9 million year-over-year. These earnings are separate from Village Farm’s produce production profits.
As of April 2, 2020, Village Farms said it controlled 58.7 per cent of Pure Sunfarms.
Cannabis 2.0 products set to roll out over summer
Building on that momentum, Pure Sunfarms said Monday it would be rolling out 2.0 products and cannabis oils over the summer.
As the weather heats up, the standard-sized pre-filled 510 vape cartridges and disposable vape pens with Pure Sunfarms’ top-selling strains will hit retailers’ shelves.
Pure Sunfarms did not respond to questions about when and where these products would be available.
“We are confident that consumers will respond to Pure Sunfarms’ Cannabis 2.0 offerings with the same enthusiastic reception that we have seen for its dried cannabis products,” DeGiglio said.
Top image via Deposit Photos