Outdoor growing is a gift from mother nature to all the licensed producers that have the facilities and the know how to get the job done. As the summer season approaches, the major outdoor growers can produce some of the cheapest cannabis flower in the industry and reap the rewards of massive yields larger than any indoor facility can produce. The three leading outdoor cultivators that have already been approved by Health Canada are set to commence growing. These companies have the potential to produce some very healthy profit margins on their new operations in the near future. Meanwhile, we’ve seen many other companies eyeing the world of outdoor growing, as they have secured or acquired land for the 2020 season ahead.
Let’s take a dive in and review the cannabis stocks that are all set up outdoors and ready to grow.
Aleafia is expected to be one of the top outdoor growers, with all-around impressive specs. Their expected yield is higher than any other company at around 60,000 kg per year. Aleafia was recently approved to begin growing outdoors in zone 1 at their Port Perry facility which covers 292,000 sq ft. The company expects to receive a Health Canada license amendment for the remaining 1.1 million sq ft in the next month. Aleafia has already begun growing its first 13,000 potted starter clones in zone 1. Upon receipt of the Health Canada license amendment, Aleafia will then plant the clones throughout the additional area of the outdoor grow facility. Aleafia is anticipating a cost per gram of $0.25, which leaves an immense amount of potential earning power in their hands. The company also has plans for oil extraction and medical clients that they can directly sell their branded product to. The extracted products, usually oils and jell caps are known to have the highest profit margins within Canada’s retail system. Aleafia’s in house extraction facility is aiming to produce upwards of 50,000 kg.
48North was Canada’s first major public cannabis company to receive outdoor cultivation approval from Health Canada and their business plan is heavily reliant on the success of their outdoor grow. The company’s 100-acre plot in Brant Country Ontario will yield roughly 40,000 kg in the first year, making them one of the smallest producers of outdoor grow volume per acre. 48North is estimating production costs per gram at around $0.25. The company is expected to use it’s organic labeled crop to produce high-quality cannabis extracts. 48North recently entered into supply agreements with Ontario (OCS), Quebec (SQDC), and Alberta (AGLC) to supply the provinces with cannabis from their outdoor grow.
The most recent licensed producer to receive Health Canada outdoor cultivation approval was WeedMD for their 27-acres of land in Strathroy, Ontario. WeedMD has plans to plant over 20,000 clones in early June and will look to harvest this fall. With the new outdoor grow coming online, the company expects to increase its production output by an additional 27,000 kg. WeedMD is taking more of a conservative approach, and planting less cannabis per acre of production property. Either way they are yielding a conservative 1,000 kg per acre, and are hoping to have over 73 acres up and approved by 2020. WeedMD has more than 20,000 plants already rooted in organic material and ready to be planted. This growing method allows for higher yields, survival rates, and consistency when compared to starting from seed.
CannTrust is the final LP worth mentioning in the outdoor cultivation conversation. The company has already purchased over 200 acres in British Columbia for their planned outdoor grow. However, they are still waiting for Health Canada’s approval. If they get their approval in time for the 2019 season they would instantly become a fierce competitor to the other outdoor growers. CannTrust expects to yield between 100,000 to 200,000 kg of dried flower with a production yield of 500 kg per acre. Just like Aleafia, CannTrust is planning to use all of the flower grown outdoors for extracted oils and next-generation products. The firm is vertically integrated and thus can handle this entire process. CannTrust hopes to be in full outdoor operation by the 2020 season as they wait for Health Canada’s approval to come in.
Overall the merits of outdoor growing can be substantially worthwhile to any large producer, as they can keep equipment costs down and ensure high organic yields. The market also seems to be slowly warming up to the fact that although it takes a very specific growing knowledge and the time frames are limited, outdoor grows can be very lucrative operations. With the cost of cannabis grown outdoors being significantly lower, it could open the door for many other LPs to follow suit and join ALEF, NRTH, WMD, and TRST. For now, we’ll refrain from speculating until this year’s results come in.
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Aleafia Health Inc. is a paid client of The Cannabis Investor.
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