Angling to be one of the biggest controlled atmosphere cannabis producers in air controlled growing chambers in Canada, Tricho-Med Corp. says it intends to increase the scale of its operations in Quebec to more than two million square feet of production capacity.
Tricho-Med is a portfolio company of LGC Capital Ltd. (TSX-V:LG), a Montreal-based outfit focused on becoming one of the largest and most diversified net growers of cannabis in the world.
Groundbreaking on the first 34,000 square feet of the project, located in Brownsburg, Quebec, is expected in the coming weeks, with the steel structure and shell anticipated to be completed in October. Stage one will consist of seven air-tight, controlled-atmosphere flowering chambers that are expected to qualify as a GMP (good manufacturing practices) facility. The company predicts production from the first phase of the buildout in 2019.
The GMP certification is necessary for international exports.
LGC has a four-year, $4-million secured convertible loan agreement with Tricho-Med, with payments dispersed based upon milestones. If Tricho-Med obtains its medical cannabis producers license from Health Canada as expected, the loan converts into shares of Tricho-Med for LGC, giving LGC a 49% stake in the company. Moreover, LGC is entitled to a 5% royalty on Tricho-Med's net cannabis sales.
Tricho-Med is one of two current investments in the legal marijuana space for LGC, the other being a 14.99% stake in Little Green Pharma in Australia.
Management says it is in the midst of due diligence for other investments in Italy and Jamaica.
In what is looking like will be a heavy volume day for LG, shares are ahead 3.5% at 15 cents with over 5.3 million shares already changing hands in the morning session Monday. Average volume over the past 10 days has been 1.86 million, according to data on Yahoo Finance.
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