Nov 30, 2015
Tree Farm Going to Pot as Weed Growers Eye Legalization
A former state-owned tree farm in northeastern Ontario will soon be growing medical marijuana, according to one of a group of Canadian companies that’s trying to capitalize on booming demand and the potential for full decriminalization.
Toronto-based DelShen Therapeutics Corp. is spending C$8 million ($6 million) to retrofit a 40,000-square-foot factory near Kirkland Lake into a facility that will eventually produce 13,000 kilograms (28,660 pounds) of medical marijuana a year, said Chief Executive Officer Barry Kurtzer. The company is awaiting final approval from Health Canada and forecasts the project will generate C$21 million in sales in its first year.
The country amended its medicinal marijuana regulations last year and Canadians, who previously could grow their own, can now use their prescription to order the drug through 26 licensed producers. Health Canada estimates the medical market may grow to be worth C$1.3 billion by 2024. The larger recreational marijuana industry may be the next to open up to investors if Prime Minister Justin Trudeau moves ahead with his plan for full legalization.
“It is possible that the timetable for decriminalization and full legalization of marijuana could have sped up,” Kurtzer said Thursday in a telephone interview.
Shares of Canadian medical-weed companies Aphria Inc., Canopy Growth Corp. and Mettrum Health Corp. have surged since Trudeau’s October election. Investors are trying to “get a leg up” before legalization, said Aaron Salz, an analyst with Dundee Capital Markets in Toronto. Companies that establish themselves in the medicinal industry will likely be first to have access to the legal recreational market, which could be worth as much as C$5 billion annually, he said. Still, a framework for legalization could be as many as two years away “at best,” Salz said in a report.
DelShen founder Martin Shefsky is also chairman of Northern Gold Mining, a company exploring for gold in the Kirkland Lake region. DelShen’s management team includes, Martin Cauchon, a former Canadian justice minister.
