FSD Pharma Acquires Atlantic Island Cannabis, Investing $40 Million to Build Footprint in Newfoundland

Integrated cannabis company FSD Pharma (CSE: HUGE) (OTC: FSDDF) is buying a controlling stake (51%) in Atlantic Island Cannabis Inc. for $6.5 million in Class B subordinated stock and, as part of the agreement, will make a $40 million investment to drive production and sales of legal marijuana in Newfoundland.

Atlantic Cannabis was founded for the purpose of addressing the marijuana market in Newfoundland and Labrador and is reportedly in discussions with the province regarding a supply agreement and retail license.

The plan is two-part, with the first phase involving the construction of a 45,000-square-foot indoor cannabis production facility in Freshwater, Carbonear, Newfoundland. The second phase will be a large expansion of the facility to about 300,000 square feet of production capacity. From the outset, FSD will lease the facility with the understanding that it can buy the site at any time for $1.5 million.

After the acquisition, which is expected to be completed by August 31, 2018, Atlantic Island Cannabis will be renamed FSD Atlantic Pharma.

"One of the compelling factors for us in considering this association is the scope of benefits for the local population," commented Atlantic Pharma chairman Suman Pushparajah. The production facility is expected to create 200 local, management and construction jobs.

FSD sees that additional as a natural fit to grow its national footprint. Through its FV Pharma unit, the company holds a producer’s license from Health Canada and is headquartered in the former Kraft plant about an hour outside Toronto in Cobourg, Ontario.

Management intends to renovate the facility to turn it into the biggest hydroponic indoor cannabis facility in the world. Via a partnership between FV Pharma and Cannara Biotech in May, the company can become the largest indoor medical cannabis grow operation in North American with combined capacity of more than 1.25 million square feet.

Shares of HUGE exploded on the scene last month when it began trading on the CSE, being added to the CSE 25 Composite Index within one month as a public entity. Shares screamed ahead from a low of 6.8 cents to as high as 20 cents in a matter of days and have continued to hold most of the gains, trading flat in Thursday morning action at 17.5 cents.