Chesterville looks to pot to recoup losses from shuttered Nestle plant

If approved, the plant's new owners believe they'll add 300 jobs to the small Eastern Ontario town
Editor's Note

This is a corrected version of an earlier story that misspelled Hamed Asl's name.

More than a decade after the closure of Chesterville’s Nestle plant rocked the Eastern Ontario town, a new group of investors is sowing the seeds of an economic revival inside the former chocolate and coffee factory.

IDP Group, which now owns the plant, has teamed up with a cannabis investment company on a proposal to turn the 373,000-square-foot building into a marijuana production facility.

If the plan is approved, IDP Group would operate the plant in the town of 2,000 people about 60 kilometres southeast of Ottawa, while Cannabis Wheaton, a Vancouver-based company headed by Canopy Growth co-founder Chuck Rifici, would provide millions of dollars in financing and share in the profits.

Hamed Asl, a partner at IDP Group, said he expects the plant to employ up to 300 people within a couple of years. He said the company has been growing various types of leafy green plants at the site since it bought the facility in 2015 in an effort to find more efficient ways of cultivating marijuana.

“When you’re talking about indoor growing systems and vertical farming, you’re talking about a lot of electrical, mechanical, structural design expertise, down to automation and robotics,” Asl said. “It piqued our interest because that was our cup of tea. We could do it in house.”

He said IDP Group, which provides products and services from construction and flooring to modular walls and office furniture, is used to working in large buildings with complex air conditioning, heating and electrical systems. Asl said the company believes it can tap into that expertise to generate much higher yields than any other current Canadian cannabis producer.

“We’re just not another company that’s coming in saying, ‘We’re going to do another big cannabis operation,’” Asl said. “We’re really focusing on the technology and the design side.”

Canadian cannabis producers are facing more and more competition from growers around the world, he said, and companies that don’t keep up with the times are going to be left behind.

“In two years, you’re going to have some major operations running in Canada, and the ones that are more efficient – the ones that are using cutting-edge technology to produce and can get more yield per square foot – those are the winning ones.”

He said the firm’s experiments with plants such as lettuce and basil suggest its methods could “comfortably” produce at least 200 grams of pot per square foot annually – double the current average at a licensed plant in Canada.

Asl said existing producers waste a huge amount of potential growing space because they typically grow crops on only one floor. The former Nestle plant, with its 30-foot ceilings, should be able to accommodate as many as seven levels of growing platforms, he said.

“You’re spending all this money putting in the security, putting in the walls,” Asl said. “You’re still temperature-controlling and humidity-controlling all that cubic metres of air in that space anyway. Why not grow (upward)?”

He said IDP is also installing LED lighting in the plant rather than the conventional high-pressure sodium lights used in most greenhouses. Asl said LED lights use less than tenth of the energy of sodium lights and generate far less heat, cutting energy costs and creating a better growing environment.

“When you talk about indoor growing, it’s 90 per cent construction technology, understanding HVAC systems and electrical systems, and 10 per cent plant health sciences,” he said.

IDP is in the process of applying to Health Canada for a production licence as an extension of KoLab Project, another Cannabis Wheaton portfolio company. Asl said that should allow his company to fast-track its application by piggybacking off KoLab’s experience with measures such as implementing proper security protocols, potentially shortening the approval process by up to a year.

The company plans to ramp up production in three phases, he said. Cannabis Wheaton will provide $12 million in funding for phase one, during which IDP expects to grow up to 25 million grams of marijuana annually on 100,000 square feet of production space. Cannabis Wheaton will have exclusive rights to sell 7.5 million grams.

“Chuck is a go-getter... He’s got bullish ideas – he’s not afraid of testing the market.”

Asl said the Vancouver-based firm’s total investment will depend on the success of the first phase, adding Cannabis Wheaton is the perfect partner to help implement his company’s ambitious blueprint.

“Chuck is a go-getter,” he said. “He’s got bullish ideas – he’s not afraid of testing the market.”

North Dundas Mayor Eric Duncan, whose township includes Chesterville, said he’s optimistic the plant will rejuvenate the local economy the way Canopy Growth breathed new life into Smiths Falls when it set up its cannabis plant at that town’s former Hershey factory three years ago.

In addition to providing hundreds of jobs at the facility itself, retrofitting the Nestle plant will create ripple effects throughout the local economy as those workers spend more money at other local businesses, he added.  

“There’s a lot of work that has to get done,” Duncan said. “But I think people are excited and they want to make this work.”

Asl praised North Dundas officials for their enthusiastic response to the proposal.

“If you don’t have the full support of the township and community and if they don’t want this to happen, you’re going to fail from the get-go,” he said. “People wanted this to happen in Chesterville.”