A Sudbury-primarily based cannabis firm that announced plans to set up shop in Espanola final summer time has hit a funding snag that is delaying the project’s improvement.
GaiaCann Inc. said its plans for the building of a very first-phase cannabis cultivation and extraction facility in northeastern Ontario have been deferred.
Locals from the northeastern Ontario paper mill town about 40 minutes west of Sudbury lately took to Facebook to express confusion.
The 32,000-square-foot facility and a nearby 100,000-square-foot-facility situated at 37 & 85 Panache Lake Road on the southeast corner of the neighborhood, dubbed “The Innovation Project” and “The Greenhouse Project” on GaiaCann’s internet site, have been listed for sale by Royal Lepage in late November.
Jeff Scharf, president and CEO of GaiaCann, explained that the creating is owned by 1 of his former providers, but the lender – BDC – does not help cannabis operations, so they necessary to discover unique funding possibilities.
In May possibly, his firm had secured a commitment for a $six.five-million loan from a Houston, Texas bank to buy the creating and also full building. Sadly, the deal fell by way of.
According to Scharf, financing for cannabis operations in Canada is a difficult endeavour since regular banks will not back them.
In spite of the “glitch,” he claims the predicament must be resolved by Nov. 29. The operation is nevertheless moving forward, he mentioned. He expects the extraction facility to be completely operational by August, 2020.
Scharf mentioned he remains positive.
The final six months have observed a lot of modifications in the cannabis industry as stock rates dropped and bigger cannabis providers like Canopy Development and Aphria Inc. have observed a decline in worth.
“The cannabis bubble burst,” mentioned Scharf. “During that time, we had the capability as a newcomer in the business to watch what was taking place in that landscape and then attempt to guarantee we do not hit these very same increasing pains as we launch out.”
Even though the original strategy was to grow cannabis in Northern Ontario, Scharf said that due to the higher price of production right here, GaiaCann has obtained two licences in Colombia and Suriname to develop crops in these South American nations for shipment to Espanola for processing.
Production fees to develop cannabis in South America, he mentioned, are equal to about 5 cents per gram.
“The facility in Espanola will be mainly for extraction,” mentioned Scharf. “We’re hunting at not just extracting a basic cannabis flower, but also hunting heavily into the hemp business and higher CBD hemp strains.”
The existing strategy is to concentrate on extraction for the very first couple of years. Then, if GaiaCann decides to move into cultivation, Scharf said that it will be a “very boutique and modest-scale” operation right here.
The extraction capacity at Espanola is about 200,000 kilograms per year, substantially extra than the cultivation capacity of about 9,000 kilograms per year.
The completion of building on that facility is nevertheless slated for 2021.
In the future, the firm does envision producing and promoting its personal cannabis solutions, but till then, the firm plans to sell wholesale to other suppliers.
GaiaCann is nevertheless in get in touch with with ONEnergy Inc., a major North American supplier of renewable power systems. In June, it was announced that Scharf had signed a letter of intent to be acquired by the Toronto-primarily based firm.
In the proposed arrangement, ONEnergy would obtain all of the company’s widespread shares in exchange for new shares of a ONEnergy spinoff firm.
Scharf mentioned they are presently strategizing about when it tends to make the most sense to take the firm public.
In a press release published on June 25, Scharf mentioned that a partnership with ONEnergy would assistance them attain a “new level of scientific growth” in the business. They strategy to perform with Sudbury-primarily based Medicor Analysis to conduct clinical investigation research on healthcare marijuana.
Even though a lot of its hiring has currently been completed, GaiaCann is nevertheless hunting to add extra chemists to its group in addition to staff with experience on promoting cannabis to a worldwide market place.
The company will be operating with a Vancouver-primarily based consulting firm to perform out the legal facts of import/export, licensing, and other challenges.
Scharf is also the owner of Greenhouses Canada, a develop-op tech firm, and he announced his intentions to enter the cannabis business final year.