Emerald Health Therapeutics Inc. signed a definitive agreement with Village Farms International Inc. to form a joint venture for large-scale, high-quality, low-cost cannabis production.
Under the agreement, Village Farms contributed a 1.1 million square foot greenhouse facility in Delta, British Columbia, which will be converted to Access to Cannabis for Medical Purposes Regulations-compliant production, subject to obtaining necessary licensing.
The facility will produce for the nontherapeutic adult-use market if permitted by applicable law and stock exchange requirements. The venture aims to be the lowest-cost producer of high-quality cannabis in Canada.
Emerald will initially contribute, in multiple stages, C$20 million in cash to fund the conversion of the greenhouse and each party will have a 50% ownership stake in the venture. Of the C$20 million, C$2 million was advanced at closing and the remaining C$18 million will be advanced in tranches upon satisfaction of certain milestones to be determined by the board of the venture.
The transaction closed concurrently with the signing of a definitive agreement, at which time the joint venture leased the greenhouse, with the option to buy. The joint venture also signed an agreement with Village Farms for options to lease or purchase a second 1.1 million square foot greenhouse and a 2.6 million square foot greenhouse, both located adjacent to the first greenhouse.
Emerald and Village Farms believe the potential conversion of all of Village Farms' greenhouse operations in Delta, British Columbia, if the options were exercised, could yield more than 300,000 kg of cannabis annually.
The venture will as soon as possible initiate the process to obtain a Health Canada license to grow cannabis under ACMPR regulations and concurrently begin converting the greenhouse for cannabis cultivation.
Any additional capital requirements of the joint venture will be contributed pro rata by Emerald and Village Farms, or by outside third-party funding.
Village Farms is a vertically integrated greenhouse grower in North America and the only publicly traded greenhouse produce company.