This story has been updated to include a construction timeline.
A Gatineau marijuana producer says it plans to start construction of a new 250,000-square-foot greenhouse this fall as licensed pot growers across the region look to ramp up production.
Hydropothecary (TSX-V:THCX) says it’s signed an agreement with Netherlands-based Havecon Projects BV to install the greenhouse at the company’s 65-acre Gatineau’s facility. Construction is expected to take 12 months.
The company says it expects the new installation will increase its annual production capacity by six times to 25,000 kilograms of dried cannabis per year. That’s roughly enough pot for 78 million joints, according to U.S. figures.
By comparison, the country’s largest marijuana producer – Smiths Falls-based Canopy Growth – harvested 10,837 kilograms of weed during its 2017 fiscal year that ended March 31.
In a statement, Hydropothecary CEO and co-founder Sebastien St-Louis said the new facility would help the company push down its production costs towards its ultimate goal of $1 per gram.
The company’s cash cost per gram stood at $1.32 as of April 30, down from $1.47 in the prior quarter. That’s believed to make it the second-lowest-cost grower in Canada, behind only Leamington-based Aphria Inc. at $1.11 a gram.
Production costs are expected to fall under ever-greater scrutiny by investors as the federal government’s July 2018 target date for full legalization creeps closer, given that regulators want to keep the retail price of pot low enough to erode the illicit market.
Hydropothecary did not say how much the new greenhouse would cost, but previously said it was raising $20 million to fund the company’s expansion. Ultimately, the underwriters of the private placement exercised their over-allotment option, raising the gross proceeds to $25.1 million.
The Gatineau company’s expansion comes as another marijuana firm, Carleton Place’s RockGarden, prepares to construct a commercial growing facility in anticipation of receiving a Health Canada licence.
Hydropothecary shares ended the day up four cents, or slightly less than three per cent, to $1.43 on the TSX Venture Exchange.