CannTrust Holdings Inc. (TSX:TRST), one of the Canadian marijuana stocks, announced that it has obtained permitting for its Phase III expansion
SmallCapPower | January 24, 2019: CannTrust Holdings Inc. (TSX:TRST), one of the Canadian cannabis stocks, Tuesday said it has received the necessary permitting from the Town of Pelham in Canada’s Niagara Region to begin its Phase III expansion. The construction process is set to begin immediately.
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The revised Phase III expansion is permitted for a footprint of up to 390,000 sq. ft. versus the 600,000 sq. ft. that was initially planned. However, with enhancements such as automation and a higher level of climate control, CannTrust would maintain its total production capacity forecast of 100,000 kg per year after completion of the Phase III construction.
CannTrust estimates that construction of Phase III would be complete by the third quarter of 2020. Initial harvest from the Phase III expansion is expected in the second quarter of 2020 and full production capacity is expected in the second half of 2020. In order to address local concerns from the emission of light from its facilities, CannTrust is proceeding to add additional fan ventilation so its shades can be completely closed, at minimal incremental cost.
CannTrust Holdings is seen as a top acquisition candidate in the cannabis space given that it is a low-cost producer with award-winning brands and has more than 57,000 medical cannabis patients.
CannTrust Holdings CEO Peter Aceto said, “We are pleased with the outcome of the discussions with the Town of Pelham. We believe this decision reflects our view that we are a trusted member of the community and that we are intent on listening to our stakeholders. The demand for our medical and recreational products continues to be well in excess of supply and we are keen to move ahead with the Phase III expansion and meet our capacity targets. We also continue to evaluate several strategic alternatives to meet and increase our initial production capacity goals. We are actively pursuing strategic acquisitions of land and facilities, both inside and outside Ontario and hope to update shareholders with these initiatives in due course. Our active patient count continues to increase, and the recreational market is currently undersupplied. We intend to make every effort to serve these markets with our award-winning products.”
The fully-permitted Phase II expansion is on track and would bring the Company’s capacity to 50,000 kg per year. CannTrust expects first harvest from the Phase II expansion in first quarter of 2019. Construction of the final range should be complete by the end of January 2019. Given the demand of medical and recreational products, a supply ramp is critical to the Company’s growth. CannTrust stock trades at a market capitalization of C$922 million with a price-to-book multiple of 5.1x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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