4 Canadian Cannabis Stocks with a Hydroponic Advantage

The Canadian cannabis stocks on our list today have made significant investments in indoor cultivation through hydroponic technology

SmallCapPower | September 28, 2018: Following recreational legalization on October 17, Canadian consumers will be faced with a plethora of cannabis options. As consumer taste gets more particular, as seen in the craft beer industry, there will likely be a transition to a focus on different types of quality and growing techniques, namely indoor vs. outdoor. One of the more popular indoor-produced cannabis methods in Canada is called hydroponics, the method of growing plants without soil by using mineral-nutrient rich water. Hydroponic cultivation is being used by many licensed producers in Canada, due primarily its lower cost/plant and higher efficiencies in general (optimized growing, water, etc.). Additionally, the method has an advantage over outdoor cultivation in Canada because it can be done year-round and allows precise control over the growing environment. On the downside, hydroponic grow systems have a high initial cost of capital and there is less room for error (temperature, over-fertilization, etc). Today, we have identified four Canadian cannabis stocks that have made significant investments into hydroponic cultivation.

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Pure Global Cannabis Inc. (TSXV:PURE) – $0.36

Pure Global Cannabis, located in Brampton Ontario, operates a 18,000 sq. ft. hydroponic facility with a production capacity of 4,000 kg per year. The Company has developed a unique multi-ponic growing system, which combines hydroponics, aquaponics and aeroponics to automate cultivation and increase crop yields. An expansion plan for Q1/2019 is expected to increase the Brampton production facility to 41,000 sq. ft., yielding an estimated 8,000 kg of cannabis production per year. The Company has also made significant investments in Colombian cultivation, owning 60% interest in Sativa Nativa. The Sativa Nativa investment includes 28 hectares of agricultural land and a 100,000 sq. ft. greenhouse located in the foothills of the Sierra Nevada mountains. All combined, Pure Global predicts a total production capacity of 132,000 kg per year once expansion is complete in Q1/2020.

  • Market Cap: $56.2 Million
  • 2018 Hydroponic Production Capacity: 18,000 sq. ft.
  • 1-Month Total Return: 5.8%
  • YTD Total Return: 50.0%

Golden Leaf Holdings Ltd. (CSE:GLH) – $0.28

Golden Leaf Holdings is a cannabis company based in Portland, Oregon, which is one of the largest cannabis oil and products providers in North America. Currently, Golden Leaf holds three manufacturing licenses in three states: Nevada, Oregon, and California. In August, the Company agreed to purchase Tahoe Hydroponics Company along with its 21,600 sq. ft. hydroponic cultivation facility located in Carson City, Nevada with a production capacity of 4,000 pounds per year. A second, 28,800 sq. ft. facility in Sacramento, California is under construction and is expected to be operational in Q1/2019.

  • Market Cap: $165.8 Million
  • 2018 Hydroponic Production Capacity: 21,600 sq. ft.
  • 1-Month Total Return: -1.7%
  • YTD Total Return: -24%

FSD Pharma Inc. (CSE:HUGE) – $0.72

FSD Pharma’s cannabis operations are focused in Coburg, Ontario, where the company is transforming the former Kraft foods manufacturing plant into the largest hydroponic cannabis production facility in the world. The facility is 630,000 sq. ft. and ideally located one hour from Toronto, Ontario. Current production is limited to 25,000 sq. ft. with a production capacity of 4,000 kg as large sections of the Kraft plant are going through a two-phase expansion plan for cannabis production. The Company agreed to a joint venture with Auxly Cannabis Group (TSXV:XLY) to finance the Kraft Facility buildout.

  • Market Cap: $949.8 Million
  • 2018 Hydroponic Production Capacity: 25,000 sq. ft.
  • 1-Month Total Return: 260%
  • YTD Total Return: 500%

Aleafia Health Inc. (TSX:ALEF)(OTC:ALEAF) – $3.97

Aleafia Health is a vertically-integrated cannabis company with a network of 22 medical cannabis clinics dispersed across Canada. For production, Aleafia operates a 76-acre ACMPR licensed cultivation facility in Scugog, Ontario, including a 7,000 sq. ft. indoor hydroponic facility with a 150,000 sq. ft. expansion plan current in the works. The Company’s annual production guidance for 2019 is estimated at 38,000 kg.

  • Market Cap: $546.8 Million
  • 2018 Hydroponic Production Capacity: 7,000 sq. ft.
  • 1-Month Total Return: 384.2%
  • YTD Total Return: 326.8%

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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