A Calgary company plans to build an 180,0000 sq. foot greenhouse in Lethbridge to produce marijuana for recreational use.
Fifty First Parallel plans to eventually produce 12,600 kilograms of cannabis annually once its three-phase development plan is complete by 2020.
The firm has bought five acres of land in Lethbridge’s new industrial park. It expects to break ground this spring and start production in its initial 70,000 sq. foot facility this fall.
Jason Kujath, president and chief operating officer for Fifty First Parallel, said the company also plans to operate a chain of three to five retail outlets in Alberta. The greenhouse and production facility, operating as a separate business under the same parent company, would supply about 50 percent of the product for sale in those stores. The rest of the stores’ offerings would include products from other licensed producers.
Kujath said the Alberta government’s policy to allow independent retail operations to sell cannabis, once it becomes legal across Canada later this year, will allow vertical integration of the company and allow shareholders to capitalize on investment.
“Phase one is a 50,000 sq. foot greenhouse with a 25,000 sq. foot header house attached to it. That facility will produce a very conservative estimate of 4,000 kilograms per year,” said Kujath.
Phase two includes another 30,000 sq. feet of growing space and phase three would add another 100,000 sq. feet on adjacent property.
At full operation, it is expected to employ about 150 people.
Fifty First Parallel has partnered with LivWell Enlightened Health, a major marijuana producer and distributor based in Colorado that has been in the business since 2009. LivWell is the largest shareholder in the proposed Lethbridge operation.
“We view them as being the experts in this industry. They’ve been ranked over the course of the last three years (as) the No. 1 producer, refiner and retailer across the United States,” said Kujath.
Through a technical services agreement, LivWell will operate the growing facility in Lethbridge for the first five years, bringing the experience needed for successful production, he added.
Though marijuana is often referred to as “weed,” it is not as simple to grow as that moniker makes it sound.
“I hear this all the time: ‘well it’s a weed. It will grow anywhere.’ That is absolutely not the case. That’s nomenclature that’s been given to the cannabis plant.… It will not grow anywhere and the quality of the product is not something that is determined just by putting it in the ground.
“It’s determined, just as is any other agricultural product, based on the nutrients that it receives, the quality of the sunlight that it receives and the care that’s given to it.”
Kujath said his company views cannabis as an agricultural product and plans to treat it as such, although it will be subject to various inspections, audits and security measures required by Health Canada and the province.
Southern Alberta growers’ experience and expertise in greenhouse operations for tomatoes and cucumbers played a role in site selection, as did the presence of a university and a college with agricultural focus.
Fifty First Parallel has signed a memorandum of understanding with Lethbridge College to undertake some form of research in its facility.
“Lethbridge and southern Alberta in general might be the best place for the cannabis production across the country,” he said, noting the region’s high number of sunny days, water accessibility, co-operative business climate and available workforce.
“We are expecting to be making a $17 to $20 million investment throughout the province, and of course the majority of that, 75 to 90 percent of that, is going to be in Lethbridge itself just in our production facility.”
The firm has raised about $16.5 million for the project so far, he added.
Recreational use of marijuana is set to be legalized on July 1, although Prime Minister Justin Trudeau recently suggested it might be delayed after municipal and provincial governments said they needed more time.
Many companies have made plans to produce and sell product. Kujath said recent figures indicate there are now 84 licensed producers in Canada, only 32 of which are also licensed to sell product. Another 208 applications are in the queue for consideration by Health Canada but it is unlikely all of those will be approved.
That’s why Kujath believes Canada will be undersupplied for cannabis for the next three to five years after legalization.
His company’s market analysis suggests there will be about 336,000 marijuana users in Alberta, using an average .35 grams per day. That works out to 43,000 kg that will be consumed in the province annually.