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FSD Pharma aims to have the world's largest hydroponic indoor cannabis production and processing facility

Last updated: 17:30 23 Jan 2019 GMT, First published: 16:36 23 Jan 2019 GMT

cannabis facility
FSD Pharma is headquartered at the former Kraft plant in Cobourg, Ontario in a large facility that sits on 72 acres of land

“HUGE” is the Canadian stock ticker for FSD Pharma Inc (CSE:HUGE) (OTCQB: FSDDF) (FRA:0K9) and it hints at the size of the company’s aspirations.

Its aim? The development of high-quality, indoor-grown, pharmaceutical-grade cannabis.

But it’s even more than that. The company intends to target all legal aspects of the cannabis industry: cultivation, processing, manufacturing, extracts and research and development. 

In short, the company’s goals really are huge. 

WATCH: FSD Pharma looking at acquisitions as it continues its build out of facility in Ontario

“We are building the largest indoor hydroponic facility in the world,” executive co-chairman Raza Bokhari tells Proactive. “We have our operations all under one roof. That gives us economies of scale and it gives us cost efficiencies.” 

FSD Pharma is headquartered at the former Kraft plant in Cobourg, Ontario, about an hour's drive from Toronto, in a mammoth facility that sits on 72 acres of land, with 40 primed for development. 

The cannabis company, through its wholly-owned subsidiary FV Pharma Inc, holds an ACMPR license to cultivate cannabis under the Access to Cannabis for Medical Purposes Regulations (ACMPR).

A huge indoor hydroponic facility

FSD Pharma is transforming its large facility in Cobourg into the world’s largest hydroponic indoor cannabis production and processing facility, with multiple business units co-supporting each other, operating under a single roof to exploit economies of scale and operational efficiencies.

FSD Pharma’s joint venture partner in the project is Auxly Cannabis Group (CVE:XLY), formerly Cannabis Wheaton Income Corp, which is retrofitting the facility. Auxly is financing and constructing the buildout of the facility with C$55 million approved in its Phase 1 development budget. 

According to Bokhari, FV Pharma will operate the facility and recover all costs, plus 10% and receive 50.1% of all production. 

Furthermore, Auxly agreed to provide operational advisory services, and will actively manage FV Pharma to ensure the project’s completion. 

Cobourg facilities have plenty of room to grow

The Cobourg facilities sit on 72 acres of land with 40 acres primed for development and an expansion capability of up to 3,896,000 sq/ft. 

It’s phase one growth plan is rolling out now: the development of 220,000 square feet of indoor grow space at its Ontario facility, which should be operational by the end of the first quarter 2019 or beginning of the second quarter. 

And there’s ample space to grow:The company is hoping to have an additional 650,000 square feet finished by the end of 2019 or into 2020. 

At full capacity, the Cobourg facility will be able to produce 400 million grams of dried cannabis flower per year. Not to mention that an indoor hydroponic production helps ensure the consistency of the product: 365 days a year. 

Rail lines feed into facility

FSD Pharma doesn’t merely have space. 

“Something many people don’t know is our logistics and our transportation network is great,” says Bokhari. “We have a rail track that comes right into our facility that could handle mass transportation, providing a lot of economic benefit to us.” 

A little over an hour away from Toronto, the facility is close to many major markets and transport routes that will prove beneficial for the distribution of product.

There is an electrical substation, natural gas lines, multiple water intakes, as well as the rail lines that feed directly into the facility, with 26 loading docks. 

Bokhari says the aim is to eventually create 1,300 jobs at the facility. 

Multiple strategic alliances

FSD Pharma has entered into strategic relationships a number of cannabis companies from joint ventures to strategic investment, or collaboration and profit-sharing agreements. 

This includes a strategic investment in High Tide Ventures, a privately held, Alberta-based retail distribution company, which owns some of Canada’s well-known retail cannabis accessory brands, including Famous Brandz, RGR Canada, Smoker’s Corner and Canna Cabana.

FSD Pharma Inc currently owns 85,003,750 shares, which is 12.25% of Canarra Biotech (CSE:LOVE). Canarra Biotech plans to be the largest indoor cultivation facility in Quebec, with a recent purchase of a 625,000 square feet facility on 27 acres of land near Montreal. FSD Pharma and Cannara have a further agreement in place where FV Pharma will lease over 105,000 square feet of Cannara’s facility for the purpose of cultivating and/or selling cannabis and cannabis-derived products. At this time, FSD Pharma and Cannara Biotech have a combined floor space of over 1.245 million square feet of indoor growing capacity.

The company also has a strategic relationship with SciCann Therapeutics, a Canadian-Israeli specialty pharmaceutical company. FV Pharma will receive premium access to the cannabinoid scientific research platform developed by SciCann Therapeutics in Israel, which includes a network of leading researchers, academic institutions and medical centers.

FSD Pharma also has a collaboration and profit-sharing agreement with Canntab Therapeutics. Canntab is the first company solely dedicated to the research and development of oral dosage therapeutic formulations of cannabis.

Breaking Canadian Securities Exchange records

Beyond its huge facility, the company has also broken records when it comes to trading. 

On its first day of trading on the Canadian Securities Exchange (CSE), it broke the all-time record for volume traded in a single first day in the CSE’s history. 

And it went beyond that, going on to break the all-time record for weekly volume traded, monthly volume traded and yearly volume traded. In less than two months, FSD Pharma broke the yearly volume traded record, trading more than a billion shares.

“We are the most liquid stock on the CSE,” says Bokhari. “We’re traded over four billion shares to-date, and just crossed five billion. We’re breaking new ground and this is a record-breaking achievement in the Canadian cannabis investment marketplace.”

Financing solid; no debt

In addition to its success when it comes to trading volume, FSD Pharma also has a healthy set of books: the company is debt-free with nothing on its balance sheet and C$20 million in the bank, alongside more than C$100 million of real estate value

Bokhari says the company is expecting top-line revenue of C$12 million to C$14 million in 2019. 

An eye to the future

The year ahead is going to be one of significant growth for a number of factors, according to Bokhari

“We’ll continue to strengthen and add to our top-tier management teams,” he says, adding that gender diversity is important as well as having an independent board. “It’s important to synchronize good people and optimize them on all levels.”

In addition to this, he says the company is casting an eye to potential acquisitions, in countries around the world where medicinal cannabis is legal -- which is around 20. 

“We are looking to identify strategic partners that open channels for us in other markets. The medicinal cannabis market has a US$134 billion market size and we want to be a leading supplier to all of these countries,” says Bokhari. 

“Our interest is to find a set of leaders that are leading the charge in other countries but that have shared values and an aligned interest. It’s exciting,” he adds. 

 

Contact Katie Lewis at katie@proactiveinvestors.com
Follow her on Twitter: @kelewis

 

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