Amidst the anticipation of the official federal lifting of cannabis prohibition in Canada, the province of Quebec has quietly prepared itself to be the nation’s marijuana leader, starting with provincial deals to provide 62 tonnes of pot to Quebec’s legal recreational market.
Deals are being made between Quebec and the market’s biggest growers both inside and outside of the province.
Among the companies serving and/or growing within Quebec’s borders will be Aphria Inc. (TSX: APH) (OTC: APHQF), Aurora Cannabis Inc. (TSX: ACB) (OTC: ACBFF), Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF), The Hydropothecary Corporation (TSX.V: THCX) (OTC: HYYDF), and MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF).
As Canada’s second largest province, the Quebec marketplace will undoubtedly be a very valuable jurisdiction within which to sell, as well as grow—The Canadian market is expected to hit $22.6 billion.
While cannabis giants such as Ontario-based Aphria and Canopy Growth are already signed on to provide supplies to the Quebec market, it’s growers with operations within Quebec who could stand to gain the most—of which currently Aurora Cannabis and Hydropothecary are the only two.
The largest Quebec-based grower so far is Hydropothecary, which is set to deliver the most supplies to the province in the first year—slated to provide a whopping 20,000 kilograms of cannabis products, including plants, sprays and powders.
Initially the province has tendered agreements with only 6 companies for the first year, however, it’s fair to speculate that more will be added in the near future, including MYM Nutraceuticals whose project in Weedon, Quebec is set to become one of Canada’s largest greenhouses, if not in the world.
Working with the municipality of Weedon, MYM and the city have ambitions to make Weedon “Canada’s Cannabis Capital”—and by erecting a 1.5 million-square-foot facility complete with a university and research facility on-site, can certainly bolster their case.
Quebec stands to be at the center of Canada’s growing cannabis sector, especially with the work being done by Aphria Inc. (TSX: APH) (OTC: APHQF), Aurora Cannabis Inc. (TSX: ACB) (OTC: ACBFF), Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF), The Hydropothecary Corporation (TSX.V: THCX) (OTC: HYYDF), and MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF) in the years to come.
VIVE LE QUÉBEC CANNABIS
According to reports from Le Journal de Québec, members of the ruling party in Quebec’s provincial government are urging Health Canada to issue more licenses for pot growers within Quebec—and they want them faster.
The fact that only two producers have so far been certified in the province is becoming irksome to Quebecers who want to be centrally involved after the anticipated legalization on July 1, 2018.
"Quebec industry is losing the race to produce legal cannabis," said Pierre Killeen, vice president of Hydropothecary, in an interview with the Journal.
As it stands, the majority of the marijuana purchased on behalf of the future provincial arm of the sector, the Quebec Cannabis Society, will come from the rest of Canada.
So far, only Hydropothecary and Aurora Cannabis are producing cannabis within Quebec. It’s abundantly clear that the province wants more—MUCH more.
Enter the proposals of other up-and-comers, including MYM Nutraceuticals, which has plans for two facilities within the province, including the massive 1.5 million square feet of growing space planned for Weedon, Quebec.
MYM’S QUEBEC POWER PLAY
Up until recently, marijuana sector analysts tempered expectations on MYM’s Weedon facility, on account of its massive scale, and the ability to see it through to fruition.
However, the company captured a significant milestone in March, when it announced it had received approval on the Weedon production facility, and commenced Phase One construction immediately.
"With the approved permits, architectural drawings and security plans already in place, MYM has commenced construction of the Weedon, QC project," said Rob Gietl, CEO of MYM. "This signifies a monumental milestone for MYM and our plans of building one of the largest greenhouses in the world. This project aligns with our goals of becoming a leading global cannabis producer."
The company is wasting no time, expecting Phase One of construction to be completed by the end of Q3, 2018. This first phase will involve building out 300,000 sq ft of greenhouse space for growing medical cannabis, as well as 20,000 sq ft for processing and manufacturing medical cannabis products. Once this phase is completed, the facility will be capable of producing 30,000 kgs annually.
The entire Weedon facility is scheduled for completion by the end of 2020, and it is estimated that the operation will be capable of producing 150,000 kgs of cannabis.
The company’s decision to place their flagship operation in Quebec was very strategic—Nationally speaking, Quebec’s costs are quite reasonable.
The province’s labor costs are on average 34% less than in the US, and 16% less than in G7 countries. Power is 36% cheaper than in the US, and 49% lower, on average, than in the G7 countries.
However, MYM over the last year has truly became an international player, embarking on a joint venture 1.2 million-square-foot cannabis facility in New South Wales, Australia, and a massive Latin American deal with leading Colombian medical cannabis company NEWCANNA.
Through the Colombia deal, MYM positioned itself within another low-cost production environment, with access to an enormous cultivation space on which indigenous growers had successfully amassed a production capacity of approximately 217,500 kg of high-grade cannabis for processing and global export.
MYM and NEWCANNA fully expect to upgrade this project’s capacity through the use of technology similar to that used at Weedon. In total, lands agreed upon in the deal span 7,400 acres of cultivation property, upon which production is expected to surpass 1,000,000 kg of cannabis within the next two years.
Moving forward, MYM stands to benefit from Quebec’s emergence as a central player in Canada’s cannabis renaissance—and hopes to become one of the province’s next major producers.
POTENTIAL COMPARABLES
Aphria Inc. (TSX: APH) (OTC: APHQF)
Aphria is one of Canada’s lowest cost licensed cannabis producers, specializing in the production, suppy, and sale of medical cannabis. The company offers sativa, indica, and hybrid medical marijuana products, as well as cannabis oils. It also provides support services in the form of medical consultations, group therapies, and rehabilitation to veteran and first responders. The company sells its products through its online store or phones, as well as engages in the wholesale shipping of medical marijuana plant cuttings and dried buds to other licensed producers. Aphria Inc. is headquartered in Leamington, Canada.
Aurora Cannabis (TSX: ACB) (OTC: ACBFF)
Aurora Cannabis boasts the second highest square footage approved for cannabis production in Canada. Together with its subsidiaries, Aurora produces and distributes medical marijuana products in Canada. The company’s products consist of dried cannabis and cannabis oil.
Aurora is the only cannabis producer located in the province of Alberta, giving the company a cost advantage through its free use of fresh mountain-fed water used on site, and housed under the lowest corporate tax rates and power rates in Canada. Capitalizing on numerous farm credit programs provided by the province, Aurora has positioned itself as arguably the lowest cost-per-gram licensed producer in Canada. Aurora became a licensed producer in 2015, and is based in Edmonton, Alberta.
Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF)
Owners of the Tweed brand of cannabis products, Canopy Growth is a multi-licensed, geographically diverse marijuana producer, described as “one of the world’s — and Canada’s first — premier exporters of marijuana” by the Financial Post in 2016. Canopy currently has a combined growing platform of over 665,000 sq. ft. of production space. It was also the first federally regulated, publicly traded cannabis producer in North America, and the first billion-dollar cannabis corporation. Canopy Growth was founded in 2014, and is based in Smith Falls, Ontario.
The Hydropothecary Corporation (TSX.V: THCX) (OTC: HYYDF)
The Hydropothecary Corporation is an authorized licensed producer and distributor of medical cannabis licensed by Health Canada under the Access to Cannabis for Medical Purposes Regulations (Canada). Hydropothecary creates award-winning innovative, easy to use and easy to understand products. With industry-leading cash cost per gram of $0.89, Hydropothecary is one of the lowest cost producers in the country. The first licensed producer in Quebec, the Company is headquartered in Quebec.
For a more in-depth look into MYM Nutraceuticals you can view the in-depth report at American News Group: http://americannewsgroup.com/2017/12/06/meet-the-biggest-money-making-industry-of-2017-and-beyond/
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