In less than a year’s time, Canada is widely expected to legalize recreational marijuana use, and licensed producers are aggressively working to fill the projected enormous supply-demand gap. Invictus MD Strategies Corp. (IMH:CA)(OTC:IVITF) has been well ahead of this push, as evidenced by the company holding the largest land package across Canada dedicated to cannabis cultivation, and expecting production capacity to reach 6,000 kilograms by January 2018.
Invictus MD is able to reach this crucial production level following Health Canada’s removal of production restrictions at its two Access to Cannabis for Medical Purposes Regulations (“ACMPR”) license holders, Acreage Pharms Ltd., which is wholly-owned, and AB Laboratories Inc., which it holds a one-third stake. In addition, Invictus MD also released details on both facilities’ sale and distribution licenses. AB Labs has submitted a request to Health Canada for a license to sell and Invictus MD’s team feels confident a passing grade is imminent. For Acreage Pharms, the company has submitted additional samples to three labs licensed by Health Canada and management is confident Acreage Pharms will receive a sales license once the quality assurance team has analyzed the results.
A Steady Supply of Quality Cannabis
Moreover, the company’s estimate of 6,000 kilograms is a near-term operating number, while in the long-term, by 2021, Invictus MD believes their production profile will spike to 50,000 kilograms of cannabis annually. The company has been able to significantly expand production capacity estimates through meticulous planning, early acquisitions, business savvy and a large warchest of cash.
“I am very pleased to report that our operational activities are unfolding according to our business plan, and that our strategic efforts to build Canada’s Cannabis Company are coming together, Dan Kriznic, Chairman & CEO, of Invictus MD, recently stated. “The issuing of the sales and distribution Amendment to Acreage Pharms and AB Labs cultivation license under the ACMPR would constitute a significant value catalyst for our shareholders. I would further comment that the company’s balance sheet remains very strong; it has minimal debt and the approximate $26 million cash in the treasury has been reserved to expand its canopy footprint on its 250 acres of property, making it one of the top producers under the ACMPR. This production is needed to meet the significant demand for high quality, standardized, pesticide free product not only for the existing medical market but also to accommodate the recreational market that will commence mid-2018.”
Without a doubt, Invictus MD has been having a banner year. In early August, the company completed its first two harvests at Acreage Pharms, located in Alberta where the company enjoys low energy costs, which is now operating at full production and has converted a vegetative room into flowering room allowing for increased capacity. For Acreage Pharms alone, capacity is expected to reach 5,000 kg by January 2018 when Acreage Pharms completes its current 32,000 square foot expansion. Acreage Pharms phase 2 expansion is now underway with the completion of the concrete foundation and the tilt up slab concrete walls will be installed by end of this month. To be more specific, Phase 2 will see Invictus MD add a 32,000-square-foot, purpose-built, multiple-room production facility, which the company posits will raise existing production levels by 800%. Currently, the storage vault inside the facility can account for $31.125MM in dried cannabis. Lastly, in June of 2018, the actual final phase of the Acreage Pharms facility will commence seeing an impressive 76,750 square foot facility built on-site – subject to permitting, which will tally another 9,000 kilograms of cannabis per year.
Production Capacity is Key
Besides the expansion at Acreage Pharms and AB Labs 16,000-square-foot facility, located in Hamilton, Ontario, the company also owns AB Ventures also in Hamilton. The company owns 33% of the facility, which has 100-acre space that will eventually hold a 21,000-square foot facility capable of producing 3,000 kg of cannabis by the end of 2018. The first expansion is estimated to be complete by the end of this year.
“Our team’s energy and focus is all going towards building our production capacity,” Larry Heinzlmeir, Vice President of Marketing and Communications at Invictus MD, previously told Equities.
At each facility Invictus MD operates humidity, climate and water supply have been scrupulously planned with designers, horticulturists, biochemists and agricultural engineers for maximum plant nutrition and a clean end product. So, at full capacity, with this trio of properties the company estimates production to reach 17,000 total kgs by 2019 and then rising up to 31,000 kgs by 2020.
Invictus MD and its team have been approaching the impending Canadian cannabis supply shortfall aggressively; however, as whole, the company has always moved quickly and with purpose. Shareholders can certainly attest to this. Since going public in 2014, the company’s leadership has continually taken assets and turned them into quality returns. As an example, the company paid out $1,000,000 to shareholders in December 2016. Invictus MD did this through the sale of Cannabis Health, which singlehandedly returned a 511% on investment, and the sale out of Future Harvest-Sunblaster, a horticulture lighting line, which netted the company $2,850,000. Even more impressive, Invictus MD was able to turn these profits after holding each company for less than a year.
Now, yet again, the company is working nimbly – remaining in budget on expansion plans and staying flush with free capital – to stay ahead of the cannabis green rush. In fact, Invictus MD, as a part of its first mover status, has attended meetings at government framework sessions in Alberta monitoring policy development for the legalization date of July 2018. With strategic moves already in place, Kriznic and his team are absolutely ready for another historic year ahead.
“Invictus MD is well capitalized for expansion,” stated Dan Kriznic, Chairman and CEO of Invictus MD, in a previous announcement. “We have one of the industry’s most experienced teams, and our focus remains on building our shareholder value with significant expansion plans as the demand for cannabis increases.”
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