A large-scale East Ladner greenhouse sees big money in pot, even if it’s sold lower prices.

Health Canada this year gave the go-ahead for Emerald Health Therapeutics, a B.C.-based licensed producer of medical cannabis, to grow medical marijuana at the Village Farms greenhouse. The joint venture, called Pure Sunfarms, is planning to grow recreational cannabis in advance of its legalization later this year.

article continues below

In a news release this week, Village Farms’ CEO Michael DeGiglio calls cannabis production “truly transformational”.

The company projects Pure Sunfarms will multiply revenue per square foot of growing capacity 10 to 15 times by switching from produce to cannabis. Earnings before interest, tax, depreciation and amortization margins should leap up from mid-single digits currently to 50 per cent or more with cannabis, the company predicts.

The company asserts these are conservative numbers, as are its production estimates. Its long-term revenue model is based on a cannabis flower sale price of $2/gram, which is currently “well below market” but reflects the strong belief by the company, as well as many experts, that cannabis flower will commoditize over the coming years, Village Farms explains.

Pure Sunfarms says it’s been given the go-ahead to begin commercial growing at scale. Village Farms plans to incrementally increase production throughout the year. Its Delta 3 greenhouse covers 1.1 million square feet in total. Pending further expected amendments to its cultivation licence, the company anticipates 250,000 square feet to be planted by the end of July, another 250,000 square feet to be in production in September, and the entire 1.1 million sq. ft. in production by the end of the year.

“The start of commercial-scale cannabis production at the Delta 3 facility is the most significant milestone for Pure Sunfarms to date,” said DeGiglio. “We are thrilled to definitively move forward with the accelerated production plan, which significantly increases Pure Sunfarms conservative production targets to as much as 60,000 kilograms or more of dried cannabis through the end of 2019.”

Pure Sunfarms expects to be cultivating at full production of 75,000 kilograms per year at Delta 3 by 2020.

The company notes recent equity research indicates Canada’s cannabis industry is projected to generate $12 billion in gross sales by 2025.

Meanwhile, just down the street in East Ladner, a large-scale Hornby Drive greenhouse with ties to rapper Snoop Dogg is also making the full conversion to pot.

BC Tweed’s 1.7-million-square-foot facility is positioned to also be a one of the biggest players in the Canadian recreational marijuana market.

Already the largest supplier of legal medical marijuana in Canada, Ontario-based Canopy Growth Corp., which provides about one-third of the legal medical cannabis for the roughly 225,000 Canadians who have cards, has partnered with SunSelect Produce to create BC Tweed. The partnership also has 1.3 million square feet of greenhouse space in Langley that’s converting to cannabis.