Cannasouth secures consent for new cultivation facility

Monday 23rd December 2019

Cannasouth’s joint venture partner Cannasouth Cultivation Limited has received resource consent for construction of its world-class medicinal cannabis cultivation facility in the Waikato.

In August this year, Cannasouth announced a long-term strategic joint venture with Aaron Craig and his family (Craig Family Interests) to construct and operate a medicinal cannabis and hemp cultivation and production facility – Cannasouth Cultivation Limited (CCL).

Cannasouth and Craig Family Interests each hold a 50% interest in CCL and have initially contributed $1 million of paid up capital to the joint venture company for the first phase of the operation’s development.

CCL will service and supply Cannasouth’s medicinal cannabis flower production requirements.

Construction of the cultivation and processing facilities is expected to start in February and be fully operational by mid-2020.

“Getting resource consent brings us one step closer to being able to cultivate commercial quantities of pharmaceutical quality medicinal cannabis,” says Cannasouth CEO Mark Lucas. “We will incorporate this cannabis into our initial products, explore export opportunities, and further develop next generation cannabinoid formulations ready for human efficacy and drug delivery-controlled trials.

“With the Government’s medicinal cannabis regulations now released, we have the certainty required to move to full commercial production as soon as the appropriate licences can be obtained once the scheme comes into force on April 1st 2020.

“The setting of GMP (Good Manufacturing Practice) quality standards in the new regulations will ensure patients receive medicines that are consistent every time.”

With Cannasouth’s strategic 60% stake in the GMP manufacturing facility Midwest Pharmaceutics NZ Limited, which is operational and revenue generating, and Cannasouth’s joint venture with CCL, the company is perfectly positioned to produce medicines that meet the new GMP quality standards, while also enabling it to get product to market as quickly as possible.

“Achieving GMP is very difficult and not all companies entering this sector will be able to operate to this standard,” says Mr Lucas.

CCL will now commence stage one of its operations by constructing a state-of-the-art hybrid greenhouse cultivation facility utilising only a part of the 111-acre site.

Mr Lucas says the design of the facility means the company will be able to expand when necessary, taking a phased approach in order to avoid over-capitalising in cultivation activities.

“Further expansion at the site will enable us to explore multiple cultivation strategies depending on the end product and export demand and quality requirements.

“Our phased expansion strategy will ensure capital is only deployed when market demand exists for the end product. This flexibility will enable Cannasouth to adapt to pricing pressures as the market matures to ensure end products remain competitively priced, ultimately reducing the cost to patients.”

The first stage of the build will involve construction of the processing headhouse and the first two growing modules, which will be capable of producing circa 2,000kg per annum of export quality medicinal cannabis flower. This modular approach means further growing modules can be seamlessly and quickly added to expand production to circa 10,000kg per annum.

“Strategically, it is important Cannasouth can produce flower that meets the highest export standards. CCL’s facility is designed to produce flower that will meet these quality standards, which opens up export options while the New Zealand market develops,” says Mr Lucas. “It will be important to have a consistent supply of raw materials for CBD’s own products, while also being able to leverage export opportunities.”

Situated on a rural site in the Waikato heartland, CCL will grow high quality, pharmaceutical grade cannabis at the lowest possible production price by utilising the power of the sun and incorporating the most advanced energy saving technologies available in the industry.

The proposed state of the art hi-tech, hybrid greenhouse will ensure CCL minimises the impact on the environment and produces top quality pharmaceutical quality product.

“We don’t believe the future of medicinal cannabis cultivation is in warehouses in cities,” says Mr Lucas. “We believe in using the power of the sun, while investing in energy saving materials and technologies, and water saving systems.

“Traditionally, high-quality pharmaceutical grade cannabis is grown indoors in large warehouses and production can come with a high environmental price, especially in terms of energy consumption.

“By growing in a rural area with lower land costs, utilising the sun for most of our lighting, investing in energy saving greenhouse building materials and incorporating solar energy production, we will be able to produce the highest quality flower at a much lower production price point than indoor growers. This is important as the market matures and pricing pressures increase.”

The Cannasouth Group - with Cannasouth Cultivation Limited for raw production, Midwest Pharmaceutics NZ Limited for medicines production, and Cannasouth Plant Research New Zealand Limited for research and product development - will be able to deliver on its strategy of “seed to sale”, while operating at lowest possible production prices, highest quality, and the smallest environmental footprint possible.

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