Emerald Health Therapeutics Finally Gets its B.C. ‘Bud’ MOU

Emerald Health Therapeutics (TSXV:EMH) said it will allocate ~13,000 kg of cannabis products for the B.C. recreational market over the next year and a half

SmallCapPower | July 30, 2018: Emerald Health Therapeutics, Inc. (TSXV:EMH), just two weeks after being omitted from the initial list of supply MOUs released by British Columbia Liquor Distribution Branch (BCLDB) on July 11, announced on Tuesday that it has signed an MOU with the BCLDB for the supply of cannabis products to the BCLDB to serve the adult-use market throughout the province. The supply deal is a big relief for Emerald Health as it was the most notable left off in the initial list. Following the news development, shares of Emerald Health rose nearly 11% in two days (2.3% on Tuesday and 8.6% on Wednesday), recovering most of the losses it suffered when it was not featured in the initial BCLDB list.

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As per the initial terms, the MOU references 1,086 kg of cannabis products. Based on Emerald Health’s own assessment of the B.C. market opportunity, it will allocate ~13,000 kg of cannabis products for the B.C. recreational market over the next year and a half. Emerald Health is in discussions with other provinces and expects to announce additional supply commitments in the near future.

Emerald Health CEO Chris Wagner said, “Emerald has a strong relationship with the BCLDB team, and our new supply partnership will allow us to provide them with local access to our large cannabis production capacity. We have been in negotiations with the BCLDB for a number of months and elected to wait until we could achieve suitable pricing before committing to an MOU.”

One of the first licensed producers in B.C., having received its cultivation license back in February 2014, Emerald Health is preparing for the large recreational opportunity through significant capacity expansion. The Company is currently retrofitting its 50%-owned Pure Sunfarms 1.1 million sq.ft. greenhouse in Delta, B.C., with production expected to be ~50,000 kg/year in 2019 and more than 75,000 kg/year when the facility reaches full production. Emerald Health Therapeutics’ wholly-owned 75,000 sq.ft. Agro-Biotech indoor cultivation facility in Montreal, Quebec, is operating with an initial capacity of 20,000 square feet. Emerald Health currently trades at a market cap of $378 million on the TSXV.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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