Gatineau marijuana producer Hydropothecary announces plans to go public

A Gatineau-based medical marijuana firm with a self-declared goal of becoming the “Coca-Cola of cannabis” has unveiled a new 36,000-square-foot growing facility as well as plans to go public on the TSX Venture Exchange.

“We’re exactly where we want to be and we continue to have demand that exceeds our supply,” Adam Miron, chief operating officer of Hydropothecary, told OBJ last week before the new building opened for the public to have a sneak peek.

The company announced late last week it is planning to debut on the TSX Venture Exchange in the first half of 2017.

Under the reverse takeover proposal, Hydropothecary’s shareholders will acquire a publicly owned shell company called BFK Capital Corp. that will begin trading under the Hydropothecary name. The firm’s ticker symbol has yet to be determined.

CEO Sebastien St-Louis said with Canada’s medical marijuana industry thriving and legalization on the horizon, the time is right for the company to go public. He pointed to a recent study by professional services firm Deloitte that concluded recreational marijuana’s annual impact on the Canadian economy – including everything from sales of marijuana paraphernalia to tourism revenue and taxes – could be nearly $23 billion.

“I think that (number) might be a bit conservative,” he said. “The markets are responding well to marijuana, and we want to take advantage of that.”

Hydropothecary has already raised about $15 million from private investors, Mr. St-Louis said. Being publicly traded will allow the company to raise more capital to meet eventual recreational demand, he added.

Mr. St-Louis said the latest expansion will give Hydropothecary 42,000 square feet of growing space, allowing it to boost production to 3,600 kilograms a year from the current 600.

Mr. Miron said the company is awaiting final Health Canada inspection of the new facility and expects to get a licence to start growing pot there early next year.

In the meantime, Hydropothecary is already preparing to ramp up production when the new greenhouse is officially a go. The company held a job fair in conjunction with the open house with an eye to hiring another 40 employees on top of the 51 already on its payroll.

Hydropothecary, which has 65 acres of property in Masson-Angers, currently sells four strains of marijuana under its own label at a price of $15 a gram and also grows several strains for a number of other private labels.

The company doesn’t reveal sales figures or how many customers it has, but Mr. Miron said it’s running at full speed to keep up with demand.

“We continue to sell basically everything we’re growing, so we’re happy about that,” he said.

All of those sales right now are in Canada, although Mr. Miron said the company is exploring opportunities for export agreements in other countries such as Colombia.

Where the massive market directly south of the Canadian border fits into Hydropothecary’s plans is still uncertain. In the Nov. 8 elections, seven U.S. states representing more than twice Canada’s population voted to legalize marijuana for either recreational or medicinal use, but shipping pot into the country for any reason is still illegal.

Some industry observers have said they expect many Canadian producers to enter into partnerships or joint ventures with their southern neighbours following the referendums.

While Mr. Miron wouldn’t rule out such arrangements, he said Hydropothecary is taking a wait-and-see approach.  

“The U.S. market is always sort of that market that everyone in the industry talks about,” he said. “Until things happen at the federal level, there’s no business for us to do there. Should the rules change federally, obviously that would be a very interesting business opportunity that we would very seriously look at.”

In the meantime, the firm will continue to focus on growing its presence in Canada, Mr. Miron said.

“The reality is the Canadian market is very strong,” he said. “At this point, we’re very happy continuing to play in the Canadian market until our supply and the supply of the industry as a whole is greater than the demand.”

When the Gatineau company announced in the fall of 2015 it was selling its operations to Oakville’s Canadian Cannabis Corp., Mr. St-Louis said Hydropothecary was bidding to become “the Coca-Cola of cannabis.”

The deal with Canadian Cannabis ultimately fell through, but Mr. St-Louis said his firm hasn’t wavered in its desire to be an industry leader.

“I think we’re getting closer with every passing day,” he said. “That’s still the goal.”