Emerald Health Set to Ramp Up Cannabis Production

Emerald Health Therapeutics Inc.’s (TSXV:EMH) JV received an amendment to more than double its cannabis production area

SmallCapPower | August 27, 2018: Emerald Health Therapeutics, Inc. (TSXV:EMH) Thursday announced that its 50/50 joint venture with Village Farms International, Inc. (TSX:VFF), Pure Sunfarms, received its third amendment to the cultivation license from Health Canada for its 1.1 million sq. ft. Delta 3 greenhouse in Delta, BC. The amendment more than doubles Pure Sunfarms’ cannabis production area by 195,000 sq.ft. to 420,000 sq.ft. In anticipation of the expansion, the Delta 3 nursery has been producing cuttings, enabling the newly-licensed area to begin commercial production this week.

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Formed in June 2017, the Pure Sunfarms joint venture would create one of the single largest cannabis greenhouses in Canada. The JV will involve conversion of 1.1 million sq.ft. of Delta 3 to produce 75,000 kg of quality cannabis annually at full capacity, with options to convert an additional 3.7 million sq.ft. (Delta 2 and Delta 1) that would yield a massive 300,000 kg of cannabis annually. Pure Sunfarms expects conversion of the full 1.1 million square foot Delta 3 facility for cannabis production by year end.

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Emerald Health Therapeutics CEO Chris Wagner said, “We look forward to completing our build-out over the next months. As October 17th quickly approaches, we are prepared for significant sales growth and leveraging the potential of this large, highly optimized growing facility.”

In addition to the Pure Sunfarms JV, Emerald also operates the wholly-owned 75,000 sq.ft. Agro-Biotech indoor cultivation facility in Montreal, Quebec, with an initial 20,000 square feet. At full capacity, the facility will produce 10,000 kg/year starting in 2019.

Following the announcement, shares of Emerald Health surged 8.1% to $4.65 on the TSXV. Emerald Health currently trades at a market cap of $644 million with price to book multiple of 4.8x.

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

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