Medicinal cannabis growing at old mill
The former Mataura paper mill, where ouvea premix was being stored, is being converted into a medicinal cannabis and hemp mill.
Southern Medicinal Ltd, a partnership between Natural Horticulture Ltd and Dunedin-based medicinal cannabis company Soma Group, has begun converting the mill buildings to a non-THC medicinal cannabis and hemp growing, testing and processing facility.
(THC, or tetrahydrocannabinol, is the principal psychoactive constituent of cannabis.)
Executive director Greg Marshall said the project could create new jobs to support up to 500 hectares of cultivation in Southland during the next 10 years.
The initial fitout of 400 square metres of indoor grow rooms within the old mill complex is complete and growing has started on site.
Expansion plans will see the facility’s growing capacity increase to 2000sqm, with annual production of 4000 kilograms of medicinal cannabis flower and the processing of 500 tonnes of hemp flower.
The former paper mill had housed 10,000 tonnes of hazardous substance ouvea premix that, once wet, is highly toxic and releases ammonia. The premix is being moved to the New Zealand Aluminium Smelters site at Tiwai Point, where it originated, for storage in containers.
‘‘New Zealand’s medicinal cannabis market is forecast to be worth at least $1 billion by 2025, with considerable export potential,’’ Marshall said.
‘‘The mill gives us several competitive advantages in the industry, from the sheer scale of its floor space to its on-site hydropower plant. This allows us to operate from a very low-cost base and address the serious bottlenecks in processing and manufacturing capacity which are likely to constrain the medicinal cannabis industry when production begins in full scale over the next two years.’’
Southern Medicinal’s business model includes a plan to partner with the Southland farming industry through co-planting of non-THC hemp on Southland farms.
The harvested hemp would be processed into CBD (cannabidiol) products and low-emission pelleted stock feed that studies show can reduce greenhouse gas emissions from cows by up to 20 per cent, Marshall said.
He said the company had worked with AbacusBio, an agribusiness science and technology consultancy, to model the potential benefits of integrating hemp into Southland farms.
The research showed hemp had the potential to become a valuable income source and a source of environmental mitigation.
‘‘Farmers could see benefits from lower nitrate levels in waterways, lower emissions, new revenue streams and the ability to lower stocking rates while preserving returns . . . It is estimated that Southland’s economy faces a $265 million bill to meet new emissions and freshwater regulations by 2025, and we are planning on being part of the solution,’’ Marshall said.
Marshall said he developed the Southern Medicinal business model after his experience in the North American market, where the commodification of supply created price volatility and made profitability difficult for some early entrants.
‘‘Our business model is built differently to achieve optimal economic, environmental and community outcomes across a broad sweep of Southland, and to mitigate against the price fluctuations which frequently occur in newly deregulated markets,’’ Marshall said.
He said another driver of the business was to bring the safest and most affordable medicinal cannabis to New Zealand’s 425,000 estimated users.
‘‘The market is currently being supplied with imported products, most of which are of untested quality and efficacy, as well as the unregulated local black market. Our approach puts safety, testing and knowledge first to produce high-quality cultivars, medicinal cannabis and services to an industry that can and must be based on trust.’’
The Ministry of Health established the Medicinal Cannabis Scheme to improve the quality of medicinal cannabis for patients.
However, the current regulatory environment in New Zealand was a challenge, Marshall said.
He was frustrated with the level of scientific research on cannabis happening overseas but said the research occurring in New Zealand was a significant opportunity.
Marshall said he believed the industry could be a big sector and it could uplift communities with its economic impact.