HIGHLIGHTS
- Health Canada has not yet approved any of the 195 outdoor applications
- Outdoor cannabis producers aim to plant in June to ensure full harvest
- Cannabis farms seen supplying extraction and sun-grown flower markets
Cannabis growers aiming to plant the nation’s first legal outdoor crops and cash in on sharply lower production costs are still awaiting permits from Health Canada as the short sowing season quickly approaches.
Most producers will need to plant their crops by June in order to allow ample growing time before a fall harvest. Health Canada received 195 applications as of Feb. 28, the most recent data available, for outdoor licences, a Health Canada spokesperson said.
The spokesperson could not provide a breakdown of how many applications were for outdoor cultivation versus other purposes, such as composting and plant destruction.
But producers who do not receive licences in time for spring planting could miss out entirely on a 2019 harvest despite Canada’s plans to expand legalization later this year to allow products made from extracts such as edibles and topicals amid a shortage of legal cannabis. Several growers’ aim to expand their capacities from indoor operations and greenhouses to outdoor farms, where production costs are significantly lower and much of the product will be sold to the extraction market that requires lower-quality cannabis than dried flower products.
Cannabis that makes the grade will be marketed as sun-grown pot, some LPs have said.
Ontario-based 48North signed a letter of intent for outdoor grown cannabis with the Société Québécoise du Cannabis to supply 1,200 kilograms of marijuana from its outdoor farm in Brant County later this year. The LP aims to plant 88 acres on a farm outside Brantford, Ont., by June 1 with expectations to harvest 40,000 kg. This would become the bulk of the company’s output, which currently is around 5,000 kg from two indoor facilities, said Jeannette VanderMarel, co-CEO of 48North.
Of this, 90 per cent will be extracted for various products such as topicals and sublinguals, while the remainder will be sold as sun-grown cannabis. The cost of production is estimated at 3 cents a gram before being dried and packaged, or 25 cents per gram of dry bulk packaged, Ms. VanderMarel said.
“We’ve had very productive meetings with Health Canada and we’re super confident we’ll be able to secure our licence … in time for this year,” Ms. VanderMarel said.
“I don’t know if there is a cutoff date for us,” she said, about the company’s deadline to plant its 2019 crop, adding that some cultivars only require eight to nine weeks of growth, though this would produce just a small crop.
CannTrust, which makes medical and recreational brands that include Xscape and liiv, also aims to farm cannabis outdoors and has already signed two letters of intent to secure 200 acres of land. Outdoor cultivation is expected to increase the LP’s capacity by 100,000 kg to 200,000 kg in 2020.
All of CannTrust’s outdoor production will be sold for extracted products, CannTrust chief executive Peter Aceto told analysts on a conference call last month.
“This is a further significantly lower-cost way to get cannabinoid content for that (extraction) market,” Mr. Aceto said.
“So, for us, this is about biomass, and it’s about extracting the entire crop, specifically for those product innovations.”
WeedMD is awaiting an amendment to its production licence so it can plant its first outdoor crop, starting with 27 acres on a 98 acre lot this spring. The LP will “optimally” need to plant its clones by mid-June, said Keith Merker, chief executive of WeedMD.
“We expect to have our licence amendment application approved by the regulator by June, within which time we will be planting our clones outdoors and we would expect to harvest this crop in the fall, most likely in October,” Mr. Merker said.
“We expect to be competitive with those overseas jurisdictions that claim to be able to produce for less than 20 cents a gram,” Mr. Merker said, referring to the company’s estimated cash cost of production of dried product that does not including packaging.
“The true question will be, what percentage of this crop will be destined for sale as dry flower and what percentage for extracts.”