Village Farms International has commenced the build-out of its first indoor cannabis production facility in Drachten, Netherlands. Through its majority-owned (85%) subsidiary, Leli Holland, Village Farms holds one of 10 licenses permitting it to legally produce and distribute recreational cannabis in the Netherlands under the Dutch Program. The company is targeting the start of production for the fourth quarter of 2024. Leli Holland plans to sell flower and hash products across consumer-preferred formats, including pre-rolls. Village Farms plans to fund the build-out of the Drachten facility from cash on hand.
The Drachten facility, with capacity of up to 2,500 kg of dried flower annually, is the first of two facilities Village Farms has planned to supply the Netherlands legal recreation cannabis market under the Dutch Program. The second, larger facility, to be located in nearby Groningen, has a planned capacity of up to 10,000 kg annually, with production beginning as early as 2026.
“As a limited license market with a long-established consumer base and a cannabis-friendly regulatory environment, the Netherlands represents a very attractive near-term opportunity in our international cannabis strategy,” said Michael DeGiglio, President and Chief Executive Officer of Village Farms. “We are thrilled to build on our rich history in the Netherlands to leverage our experience as a leading, profitable cannabis business in Canada for this first major European recreational market. Our two-phased approach to ramping up production enables us to enter the market in a timely and capital-efficient manner in line with the rollout of the Dutch Program. We look forward to contributing to the success of the Dutch Program, as well as the communities in which our facilities will reside.”
About the Dutch Closed Supply Chain Experiment
The Netherlands government’s Dutch Closed Supply Chain Experiment is intended to determine whether and how controlled cannabis can be legally supplied to existing retailers (known as “coffee shops” (cannabis cafes)). Under the current approach, the sale and use of cannabis for recreational purposes, including at more than 550 coffeeshops across the country, are tolerated. However, production and distribution of cannabis to coffee shops is prohibited. Under the Dutch Program, 10 license holders are exclusively permitted to produce and distribute cannabis to approximately 100 coffee shops (in 10 designated municipalities) that are required to purchase from the 10 license holders. The Dutch Program will operate and be evaluated over a four-year period, with a potential one-year extension. The evaluation of the Dutch Program will inform the Netherlands government’s decision on the future of Dutch coffeeshop policy, which could include national legalization of recreational cannabis production and distribution.
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