Tilray expands pot production with purchase

Tilray Inc. has inked a deal to buy Natura Naturals Holdings Inc. for up to $70 million, a move that roughly doubles the licensed cannabis producer’s domestic cultivation capacity.

Under the agreement announced Tuesday, the Nanaimo-based company will acquire Natura’s 61,500-square-metre greenhouse cultivation facility, of which 14,400 sq. m. is licensed.

Tilray chief executive Brendan Kennedy said Natura, a licensed cultivator under the Cannabis Act through a wholly owned subsidiary in Leamington, Ont., was selected after an “extensive and thorough search for the right supply partner.”

“We’re very pleased to have an agreement in place that allows us to expand our capacity to supply high-quality branded cannabis products to the Canadian market,” Kennedy said in a statement.

The company will pay $35 million upon closing of the transaction, consisting of $15 million in cash and $20 million in stock when the transaction closes. The total purchase price may reach $70 million upon Natura hitting quarterly production milestones during the subsequent 12-month period, payable in up to $35-million of Tilray shares.

Tilray’s move comes as recreational cannabis retailers, both private and government-run, continue to face a supply crunch more than three months after Canada legalized pot for adult use on Oct. 17. The shortages, which some government entities warned may last for months, has prompted Alberta to stop issuing new cannabis retail licences and Ontario to limit the initial number of private pot stores to 25.