Vertically integrated cannabis company Aleafia Health (Aleafia Health News, Stock Quote, Chart TSX:ALEF) recently secured a grow license for its full outdoor cultivation, which could add significantly to the company’s revenue going forward, according to analyst Greg McLeish of Mackie Research Capital Corporation, who in an update to clients on Tuesday reiterated his “Buy” rating and $3.00 target price.

Aleafia, which has business units in cultivation, health and wellness clinics, cannabis education and retail distribution, announced on July 12 that it has secured a Health Canada license amendment for the full 1.1 million square feet of its Port Perry outdoor cultivation facility. Previously, the company’s license was for 292,000 square feet.

“The immediate four-fold increase in Aleafia Health’s licensed and operational cultivation area is our most significant milestone to date,” said Aleafia Health Chairman Julian Fantino, in a press release. “We will continue to lead the way in low-cost production. This exponentially increases our total cultivation footprint while securing and increasing product supply for medical cannabis patients.”

Along with the amendment, McLeish notes Aleafia’s closing on June 27 of a convertible debenture unit financing for the total gross proceeds of $40.25 million, with the funds expected to go towards working capital, strategic acquisitions and general corporate purposes. As well, the analyst points to Aleafia’s Niagara greenhouse, which is now in a grow-ready state and has submitted its evidence package to Health Canada (McLeish expects the license to come during the third quarter of this year).

Finally, McLeish says that with edibles and concentrates becoming legal this fall, extraction capacity will be critical, and the analyst points to Aleafia management’s announcement that it is adding 50,000 of extraction capacity at its processing facility in Paris, Ontario, with construction forecasted to be complete in Q3 2019.

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“Aleafia Health is well-positioned for revenue growth through 2021,” writes McLeish. “The company was recently awarded an amended Health Canada license for its entire outdoor grow operation in Port Perry, Ontario and it has brought its Niagara Greenhouse to a grow-ready state and submitted its evidence package. Aleafia has also positioned itself for ‘Cannabis 2.0’ and it is currently building out 50,000 kg/year of extraction capacity at its processing facility in Paris, Ontario.”

The analyst has updated his forecasts to take into consideration the debenture financing and updated discussions with management. He is now calling for 2019 revenue and EBITDA of $16.4 million and negative $36.0 million, respectively, and 2020 revenue and EBITDA of $156.5 million and $31.5 million, respectively. His $3.00 target represents a projected return of 170 per cent at the time of publication.