by Lynda Kiernan

CannTrust, a licensed Canadian producer of medical and recreational cannabis, is establishing U.S. production operations via a joint venture with the Elk Grove Farming Company.

After building a Canadian patient bank of 72,000 individuals, CannTrust has signed a letter of intent with diversified farming company Elk Grove Farming that will give the company access to more than 3,000 acres in California for hemp production. Under the terms of the agreement, each party will hold 50 percent of the resulting new entity.

“The retail potential of hemp-derived CBD and cannabinoid products are just beginning to be realized,” noted Bethleen McCall, Colorado Hemp Industries Association, in her article, Hemp: An Investment Door Has Opened, published in GAI News in March of this year. “With the federal policy shift, chain retailers are testing a wide range of hemp products with their customers.”

This deal, which will provide CannTrust with the ability to produce low-cost hemp with high cannabidiol (CBD) content, will position the company in the U.S. as a trusted supplier of high-quality, standardized, and consistent hemp-derived CBD formulations at commercial scale.

“This agreement represents another bold move for CannTrust. Our U.S. operation is expected to deliver a significant increase in low-cost production capacity, which will leverage our expertise in standardized CBD-based product formulation, and will give the Company a foothold in the largest international CBD market in the world with an experienced and knowledgeable partner,” said Peter Aceto, CEO, CannTrust.

CannTrust’s U.S. partner, Elk Grove Farming, brings to the table multi-generational experience in farming a range of commodities. It also has a wealth of expertise in value-added crop protection products, application, and input supply. Its team specializes in consulting on agricultural development and has unique knowledge on farming in California.

“We are thrilled to be partnering with CannTrust. Our knowledge of farming operations in California coupled with CannTrust’s expertise in developing award-winning formulations is the perfect match to become a trusted supplier of CBD products in the U.S,” said Morgan Houchin of Elk Grove Farming Company, LLC.

Heading South

The hemp marketplace is projected to be $1 billion by the end of 2018 , and close to $2 billion by the end of 2022, noted Lisa D. Hurst, dirt-to-dinner.com, in her article, Hemp: An Opportunity for American Farmers, published by GAI News in March of this year.

This projected growth is attracting Canadian companies south to the U.S., where they are forming partnerships and joint ventures as a way of establishing a foothold in hemp farming.

Earlier this year, Canada’s Village Farms International announced it was partnering with Nature Crisp, a private, large-scale farming operation and part of the Jennings agricultural group of companies, to launch a joint venture for the outdoor cultivation of high-cannabidiol (CBD) hemp and CBD extraction in multiple states throughout the U.S.

Going by the name Village Fields Hemp, the venture will be 65 percent owned by Village Farms, and 35 percent owned by Nature Crisp. At the time of the announcement, Village Fields was scouting locations for its U.S. cultivation, which is expected to reach between 500 and 1,000 acres this year, with planting beginning this past spring.  

The venture also has plans to establish extraction capabilities by the end of this year when it will begin the wholesale supply of CBD oil, and launch the production of branded CBD products for “big box” retailers in 2020.

“Hemp-derived CBD is a significant opportunity for Village Farms and we are moving aggressively on the heels of the U.S. federal legalization of hemp and hemp-derived CBD products to establish ourselves as a leading vertically integrated supplier to the U.S. market,” said Michael DeGiglio, chief executive officer, Village Farms at the time.

CannTrust

CannTrust expects to invest up to $20 million in its U.S. joint venture through 2020. Together, the partners plan to secure a long-term lease on more than 3,000 acres in southern California currently owned by the Houchin family.

CannTrust will provide expertise in growing methods, drying techniques, and extraction, while Elk Grove Farming will head-up operations, farm management, packaging, and transportation, while also supplying suitable land area and warehouse space for drying and value-added handling.

Commercial scale production is expected to be achieved in 2020, however in the time building up to that point, CannTrust plans to execute on its processing strategy on the biomass produced through the joint venture, and its product development strategy.

“Following our successful equity offering, we have the liquidity we need to fund our ambitious growth plans including our greenhouse expansion in Niagara, our outdoor cultivation operation in British Columbia, our global footprint expansion and now our U.S. operation,” said Aceto. “We continue to focus on delivering on our vision of becoming a global provider of innovative cannabis-based and hemp-derived products.”

 

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.