Canada's largest medical marijuana company is planning to construct Edmonton's first cannabis production facility to supply the therapeutic and coming recreational markets.

Canopy Growth Corp. of Smiths Falls, Ont., is leasing a 15,000-square-metre warehouse in the southeast Morris industrial park it intends to turn into a pot plant by early next year, Canopy president Mark Zekulin said Tuesday.

"We operate six different production sites. With recreation marijuana on the horizon … we have a need to grow rapidly," he said in an interview.

"(Edmonton) is an excellent place to do business; there's great energy rates, which is a big input cost for us, and we want to start producing."

The only similar plant under construction in the region is Aurora Cannabis' 75,000-square-metre Aurora Sky operation beside the Edmonton International Airport, which the company describes as the world's largest legal marijuana production facility.

Alberta currently has two small licensed plants, one 180 km west of Edmonton and one north of Calgary.

Canopy's next steps will be applying to Health Canada for a production licence and starting renovations to the 2.8-hectare property once existing tenants leave next fall so they can start selling around the time recreational usage will be legalized July 1, 2018, Zekulin said.

"We want to have a presence in a very important market," he said, adding demand will likely exceed supply in Canada for at least five years.

The completed project will cost "tens of millions of dollars," have the capacity to put out 10,000 to 15,000 kg of marijuana annually and employ about 100 people, he said.

Canopy has a 20-year lease with an option to purchase from building owner Goldman Group, a major shareholder in Canopy, he said.

Ryan Zabloski, a vice-president with Avison Young real estate who worked on the deal, said about one-third of the net absorption of industrial space in Denver, Colo., was taken by the marijuana industry in 2009-14, and he thinks Edmonton could see a similar spike.

Avison Young principal Thomas Ashcroft said they looked at properties in Calgary, but Edmonton had the best opportunities in terms of buildings, prices and location.

They've been fielding inquires from other groups looking for Edmonton cannabis locations over the last two years, but high start-up costs deter many people from investing, he said.

However, Ashcroft doesn't think this will be the last facility built in the city.

"How many times in your life have you been in on the beginning of a new industry? It's an exciting time to see how our markets are developing."

gkent@postmedia.com

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