The Friendly City has entered the cannabis game.

With the announcement earlier this week that HEXO Corp. has acquired an interest in the former Sears distribution centre’s 2,004,000 sq. ft. facility, Belleville will soon be getting many good, white lab-coat jobs.

This is HEXO’s first facility to be established outside of Quebec, further delivering on its national expansion strategy and providing capacity for the manufacturing of advanced cannabis products, including cosmetics, vapes, non-alcoholic beverages and other edibles.

The centralized location, conveniently located along primary shipping routes in Ontario, presents the opportunity to process and distribute products and to fulfill commitments across Canada. The space also supports HEXO’s hub and spoke model. Its scalability, flexibility and location are ideal to deliver on anticipated future joint ventures with Fortune 500 companies for cosmetics, edibles, vapes, and more, positioning it to become a centre of excellence for all of HEXO’s joint ventures. HEXO’s expansion will also lead to the creation of jobs and a rejuvenated employment sector for the area.

“This is fabulous news for the city,” said Karen Poste, manager of economic and strategic initiatives for the City of Belleville. “The decision to sell cannabis to adults has already been made, so we now have the opportunity to create good jobs in the region and we have an excellent partner in Loyalist College. It’s a huge strategic advantage for us since Loyalist already has the licensing and approvals from Health Canada and the programs in place, so we are set up well to create good jobs in the community,”

The building, previously used as a Sears distribution centre, will be owned in a joint venture with Olegna Holdings Inc. Initially, HEXO plans to lease up to 500,000 sq. ft. of the space from the joint venture. The proposed use of the building is conditional on the city approving the rezoning application.

“The company (Belleville Complex Inc.) that bought the building is free to occupy it and use it for all existing approved uses such as warehousing and manufacturing, but HEXO will have to wait for the appeal period for zoning application to pass, likely in early October, before they can proceed with their plans. There will also be some renovation work to be completed,” said Poste.

“There is a skilled workforce in the Belleville area, and we look forward to capturing it,” stated Sebastien St-Louis, HEXO’s co-founder and CEO in a press release. “We are investing in the region and its people with a view to achieving a sustainable national presence. For the first time, we are stepping out of our home province of Quebec and are committed to and demonstrating our commitment to serve and expand across Canada. And we are keeping future partnership and international opportunities in sight for the near future.”

The building is owned by Belleville Complex Inc., a joint venture in which HEXO will hold a 25 per cent interest and Olegna Holdings Inc. will hold a 75 per cent interest. In addition to its initial lease of 500,000 sq. ft. of the space under a long-term lease, HEXO will have rights of first offer and first refusal to lease the remaining space in the building. As part of the transaction, HEXO has loaned $20 million to Belleville Complex to acquire the building. The loan will be repaid within 120 days from September 7, 2018, and as of October 7, 2018, will bear interest at an annual rate of four per cent, which interest shall be payable monthly. The loan is secured by a first mortgage over the building. The transaction is subject to the satisfaction of certain conditions and is scheduled to close on October 12, 2018.