Beleave receives approval from Health Canada to cultivate cannabis
Moments after receiving the email they had been awaiting for years, executives at Beleave Inc. (CSE: BE) held an impromptu dance party. “We were just elated,” says chief executive officer Roger Ferreira. “All our hard work and perseverance had culminated in the realization of our dream.”
On May 19, the Hamiltonbased biotech company became Canada’s 44th licensed producer of medical marijuana. Now, executives at Beleave are reflecting on the hard work they’ve done to get to this point —and also planning for a bright future.
Before Health Canada’s final inspection on March 15 — the last of six stages leading up to the granting of a licence — the company took steps to ensure its 14,500-square-foot cannabis production facility met established government regulations. Beleave executives focused much of their attention on manufacturing and sanitation practices, security systems and recordkeeping.
They built that facility on their 17.5-acre property with an eye to the future. “We built our site in a way that would allow us to expand our production space in a timely and cost-efficient manner after getting a cultivation licence,” Ferreira explains. That meant giving careful consideration to water purification and distribution, power supply and cloud server storage required for the facility’s recordkeeping infrastructure.
“It was important that we increase our natural gas supply as well as the capacity of our power lines to accommodate power requirements after expansion,” says Ferreira. “Our IT infrastructure has also been designed in a way that will enable it to provide the data storage capacity required to keep records of video surveillance and intrusion detection systems down the road.”
Now that it has its licence, Beleave is forging ahead with the planned expansion, including the building of a 60,000-square-foot hybrid greenhouse. The result of advances in design and technology, the hybrid greenhouse combines the benefits of outdoor growing (natural light) and indoor growing (precisely controlled environment), with the goal of producing higher-quality plants and higher yields than are possible from traditional greenhouse growing. Bill Panagiotakopolous, the company’s chief operations officer, expects the facility to be completed by the fall.
After that, the next step will be the construction of a larger adjacent hybrid greenhouse. That structure is still in the design phase, and a workflow study is underway to determine the optimal layout. In total, four acres will be used for the expansion. “The important point here is that we have the space to accommodate an expansion of that size,” says Panagiotakopolous. “Not a lot of licensed producers have that option.”
Also, in early May, Beleave signed an agreement with Cannabis Wheaton, a cannabis streaming company, to finance the purchase and construction of a second production facility in exchange for equity participation in it and a production yield allocation. The new facility, expected to be in Ontario, will be designed to accommodate 200,000 sq. ft. of cultivation space.
The medical marijuana market is booming, and it is expected to grow further still. Many licensed producers are now struggling to keep up with demand, but Bojan Krasic, Beleave’s chief financial officer, expects that problem to dissipate as the industry matures and new players enter the marketplace.
“Down the road, only the producers who provide the highest-quality product will thrive,” he says, “and those will be the producers committed to research and development.” Beleave fits the bill, he says.
The company believes its prospects are even rosier now that the federal government is about to introduce legislation legalizing recreational marijuana.
Five months ago, publicly traded medical marijuana companies already had a combined market value of $3 billion, but the legalization of recreational marijuana could expand their revenue significantly. Last year, CIBC World Markets predicted that legalized recreational marijuana could become a $10-billion-a-year industry; other analysts put that number even higher.
There might be so much demand, Krasic says, that even the biggest licensed producers won’t be able to keep up. “There will be a lot of room for players like Beleave to grab a big piece of the market share,” he says — a key reason the company is so aggressively planning expansion of its facilities.
“Beleave will continue to focus on the medical market until we get a sense of the full potential of the recreational market — until we know details about regulatory requirements, price points, taxation and other factors,” says Krasic. “But we do expect to be involved in both markets down the road, and to establish a brand that is associated with top-quality product.”
There will be a lot of room for players like Beleave to grab a big piece of the market share