GTEC and Canopy Growth entered into a purchase and sale agreement pursuant to which GTEC, subject to certain conditions set out below, will acquire the second expansion site in Kelowna, BC of Canopy Growth.
Assuming completion of the transaction and receipt of a cultivation license by Health Canada, the facility is estimated to increase GTEC’s annual production capacity by 4,000 kg, bringing the company’s total projected annual output to 18,000 kg throughout 160,000 sq. ft. of indoor flowering space by 2020. The facility is near completion and has been built out to specs and standards that adhere to GTEC’s mandate to produce premium flower in purpose-built indoor facilities. The cost to complete construction of the facility is estimated to be approximately $2 million.
“We are very excited about this opportunity, as the facility has been thoughtfully designed and built-out, and is located in our own backyard,” said Norton Singhavon, GTEC Founder, Chairman and CEO. “With the increasing demand of our premium flower, we look forward to further increasing our production capacity by 2020.”
Health Canada recently announced changes on May 8th, 2019 requiring new applicants for licenses under the Cannabis Act & Regulations to have a fully built site at the time of their application. Given that the facility is near completion, GTEC anticipates that it will be ready to submit its application and evidence package to Health Canada within a timely manner, and – subject to the closing of the transaction and receiving Health Canada approval – to commence cultivation in early 2020.
The purchase price of the facility is $13 million, which includes, among other things: all rights; title and interest to the land; growing equipment; and project-related documents. In connection with the PSA dated May 16, 2019, GTEC provided a refundable deposit of $250,000 and will be required to provide an additional $500,000 non-refundable deposit upon satisfaction, on or before August 15, 2019 of the following conditions:
- GTEC being satisfied with its due diligence relating to the transaction;
- GTEC, having obtained a financing commitment for the amount and upon terms satisfactory to GTEC, acting in its sole discretion; and
- Approval by GTEC board of directors of the transaction.
The board of directors of GTEC approved the transaction, subject to ongoing due diligence and receipt of satisfactory financing. The transaction remains subject to the approval of the TSX Venture Exchange. Assuming the aforementioned conditions are met, the transaction would close on or about October 15th, 2019.