Government signs deal with another cannabis producer
Another marijuana production facility is being built in St. John’s, with some familiar surnames in the mix. The province announced Wednesday that it has entered into a 20-year production and supply agreement with Atlantic Cultivation Inc. and its partner, the Auxly Cannabis Group, which is the third such agreement the province has signed.
Atlantic Cultivation is a locally owned company, with Cynthia Crosbie, Tom Collingwood Sr. and Chris Hickman listed as investors.
“We have, in this situation, local entrepreneurs that are heavily invested, that have created thousands of jobs in their lifetimes, in the generations of their company’s existence, and they are committed,” Christopher Mitchelmore, minister of Tourism, Culture, Innovation and Industry, told reporters at the announcement.
“They’re putting up their own capital, so they’re going to do everything they can to make this work.”
Mitchelmore said the names of the investors were released in the interest of full disclosure, and dismissed that it might be related to the controversy last year about the ownership of a numbered company that sold land to Canopy Growth in St. John’s.
“Government had a direct relationship with Canopy Growth and it has no relationship with a third party as to who it does business with. It does its due diligence to make sure it meets the obligations. In this situation, Atlantic Cultivation is made up of a group of three numbered companies with shareholders. These are the people we’re directly dealing with,” he said.
Regarding the Canopy deal, that was between the company and its third party, Mitchemore said, and not something the government would get involved in.
The company has entered into a performance-based incentive program with the government, with the company having a 10year deal on the remittances it pays to the Newfoundland Liquor Corp. (NLC) on its products.
It gets a 10 per cent reduction in remittances paid to NLC on products sold in retail stores, a five per cent reduction for online sales and a three per cent reduction for its product sold in other retail stores.
“They’re putting their capital, their investment, and they have to perform to get a benefit incentive,” Mitchelmore said. “In return, the government is getting jobs, they’re getting a return to treasury, the production that was needed to supply the retail market in Newfoundland and Labrador.”
He stressed the province had put no money into the project, and the investors are taking the risk.
“We have measures in place that if the company is unable to perform or meet the agreement, we have security in place that we’re able to gain back the reduced remittances.”
EXCELLENT OPPORTUNITY, CROSBIE SAYS
The facility is being built on Kenmount Road, with construction starting next week. It is expected to be completed by spring 2021, and the agreement with the province is to create 117 person years of employment annually, producing 16,000 kg of cannabis annually.
According to a news release from the province, the average annual salary for jobs related to the facility will be $55,800.
Chris Crosbie, chief operating officer for the company, worked in the cannabis industry in other jurisdictions and came home a few years ago to work in oil and gas. With the legalization of cannabis, he sought investors and the company was born.
“As a Newfoundlander, to me, I am extremely proud of this moment,” he said. “Seeing the province going from having no licensed facilities and attracting multiple projects of our size to here and also infusing more horsepower into our project as well, it means a lot to me.”
Regarding the remittance, Crosbie said this project was underway before the province announced the program and, to them, it allows them to make a bigger facility and hire more people.
The company is planning to produce 16,000 kg of marijuana a year and all of that won’t stay in the province, according to Crosbie.
He said the lion’s share of their focus will be in the province, but they expect to export it nationally. He said there are a lot of producers in the market right now and not all are producing a high-quality product. They will focus on a niche market and niche consumer, he said, and will focus on quality.
“I’m 100 per cent sure Atlantic Cultivation will change the quality of legal cannabis,” he said.
The company they have partnered with, Auxly Cannabis, has been in existence since 2017 and has operations in Canada and Uruguay.