Pot greenhouses up for sale in B.C. as ‘legal’ demand falters
Large cannabis growing facilities are up for sale in communities across B.C. as the industry comes to grips with slower-than-expected sales of government-sanctioned cannabis products.
An 18,000-sq.-ft. cannabis cultivation and processing facility is for sale in the Village of Lumby after its owner True Leaf Brands entered bankruptcy proceedings. The asking price for the warehouse-sized operation on 40 acres is $7.25 million.
“We are on a good piece of land in a town that is supportive of the business, so we’ve had quite a bit of interest,” said True Leaf CEO Darcy Bomford. “The deadline for bids is June 19.”
Zenabis is selling a 25,000-sq.-ft. licensed cannabis cultivation and processing facility on Annacis Island for $12.75 million.
An uncompleted cannabis production facility in Kelowna is listed at $13 million, but a potential buyer will need to sign a non-disclosure agreement before the agent will show it. The 25,000-sq.-ft. facility, owned by Doja Cannabis, is advertised as “80 per cent complete.”
At least a dozen mid-sized cannabis companies have recently filed for bankruptcy, and industry leaders say there are many more to come.
“Based on the calls that I’m getting, I’m expecting another dozen more as funding has dried out,” said Tilray CEO Brendan Kennedy. Tilray, with production facilities in Nanaimo, cut its staff by 10 per cent earlier this year. Even relatively stable companies such as Aurora and Zenabis have either downsized or suspended construction of new facilities. Aurora and Canopy have both jettisoned their CEOs as the industry consolidates.
“Some people may call this a turnkey opportunity, but I see it as a reckoning,” said Barinder Rasode, CEO of the cannabis business accelerator Grow Tech Labs.
“I would be surprised if anyone buys them for cultivation.”
Sometimes an industry consolidation is an opportunity for cash-rich firms to buy up distressed assets on the cheap. But between the pandemic and relatively slow acceptance of government-licensed cannabis by the market, that might not happen this time.
“I know for a fact that some of them are priced at assessed value, which doesn’t take into account the licence or any of the improvements,” said Rasode.
As more craft cultivators enter the legal growing space through micro-producer licensing, retail cannabis customers will have access to quality products that are difficult to produce in an industrial-scale setting, she said.
The “gold rush” flood of capital into the cultivation business ran out of gas when companies weren’t able to establish cash flow, while many grey market B.C. growers just kept serving their existing clientele.