Delta 9 Receives Expansion Approval from Health Canada for 95 Additional Grow Areas, Provides Expansion Update
WINNIPEG, MB – December 2, 2019 – DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: VRNDF) (“Delta 9” or the “Company”), is pleased to announce it has received Health Canada approval to place 95 new Grow Pods from its Phase II expansion into production. Delta 9’s proprietary cannabis production methodology is based around a modular, scalable, and stackable production unit.
The Company is now working to place the 93 flowering Grow Pods and two support Grow Pods into production which will increase production capacity by 56% and bring the total number of Grow Pods approved by Health Canada and in production to 297. The Company anticipates that these additional Grow Pods will add an additional 2,975 kg/year in dried cannabis flower production, bringing Delta 9’s overall anticipated production capacity to 8,325 kg/year.
This is the next step for Delta 9 in terms of Health Canada expansion approvals for our Phase II expansion. Our Grow Pod style of production allows us to produce a high quality and low-cost cannabis product,
said John Arbuthnot, CEO of Delta 9.
Additional supply capacity will allow us to pursue additional distribution agreements and further secure our place in the Canadian cannabis market.
Phase II Expansion
The Company is working to expand its Health Canada licensed perimeter to include additional buildings on its licensed production facility in Winnipeg, Manitoba (the “Delta Facility”) which will bring the total licensed square footage to approximately 135,000 square feet, from 80,000 square feet currently licensed by Health Canada.
The Company is also now working to finalize its purpose-built cannabis processing center which will allow for fully automated bottling, packaging, capping, and labelling functions for its consumer-packaged dried cannabis products. The Company anticipates that once the processing center is licensed and operating at capacity it will allow for processing of up to 25,000 kg/year of dried cannabis flower material.
The Company also wishes to announce that it is has revised its previously released expansion plans for the remaining Phase II areas of the Delta Facility to include an additional 129 Grow Pods, comprised of approximately 114 flowering Grow Pods and 15 support Grow Pods. This is less than the 311 additional Grow Pods previously contemplated under the Phase II expansion plan which would have seen a maximum of 608 Grow Pods under license. Once fully built and licensed, the Company anticipates having up to 420 Grow Pods under license as a part of its Phase II expansion. The additional Grow Pods will be placed within existing warehouse space at the Delta Facility.
In light of the current cannabis market environment we are taking a more conservative approach to capital deployment,
said John Arbuthnot, CEO of Delta 9.
Our goal is to ensure that our current licensed production assets are operating at design capacity and we achieve efficient sell through rates while continuing with our organic expansion strategy.
The Company anticipates that this further Phase II expansion will add an additional 3,650 kg/year in dried cannabis flower production, bringing the overall anticipated production capacity for the Delta Facility to 11,975 kg/year. The anticipated construction cost of the balance of the Phase II expansion is expected to be approximately $7,000,000 which the Company plans to fund with a mix of cash flows from operations and cash on hand.
Phase III Expansion
The Company continues to plan for future development on its Winnipeg based site with its previously announced Phase III expansion. The long terms plan for the site include a 15 MW hydro substation, 15 modular warehouses covering approximately 480,000 square feet of production space on two levels, 1,500 Grow Pods, and a total cannabis production capacity of up to 60,000 kg/year.
The Company will provide further updates on the Phase II and Phase III expansions as they become available.
For more information contact:
Investor & Media Contact:
Ian Chadsey VP Corporate Affairs
Delta 9 Cannabis Inc. is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9's shares trade on the Toronto Stock Exchange under the symbol "DN" and on the OTCQX under the symbol VRNDF. For more information, please visit www.delta9.ca.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to: (i) increases in Delta 9’s cannabis production capacity; (ii) the completion of Delta 9’s cannabis processing center; and (iii) the completion of Delta 9’s Phase II and Phase III expansions and the costs thereof. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including the Company’s actual financial results being different from its estimates as well as all risk factors set forth in the annual information form of Delta 9 dated April 30, 2019 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.