Sources say process has been bumpy, but company insists concerns over massive B.C. facility are overblown
It’s 11 a.m. on a rainy Thursday morning and hundreds of Canopy Growth Corp. employees are shuffling into work at the company’s facility in Aldergrove, B.C.
Together they account for one-third of Canopy’s licensed growing space, making Aldergrove one of the centrepieces of the company’s ambitious growth strategy, which has seen it acquire giant greenhouses at a frenetic pace over the past five years. At least three people deeply involved in the cannabis industry — two of whom said they had visited the Aldergrove facility — told the Financial Post, on condition of anonymity, that the ramp-up at Aldergrove has been bumpy.
Canopy has publicly acknowledged hiccups at the facility, saying last fall that a number of plants had to be destroyed due to delays related to “infrastructure” and “regulatory approvals,” but it has insisted the plant deaths were not related to growing issues. The 1.3 million square foot Aldergrove facility and another 1.6 million square feet of space in Delta make up two-thirds of Canopy’s total licensed operations.
According to Greenblatt, Canopy also hired a large number of workers — primarily from Guatemala — through the federal government’s Temporary Foreign Workers program. The idea behind getting labour and licensing in order was to have a six-month head-start on cultivation in the two massive sites in order to be primed with thousands of kilograms of fresh bud in time for recreational legalization in October of last year.
Less than two hours later, a video showing a large greenhouse full of dead cannabis plants started circulating on Twitter and Reddit. On social media, many commenters, including some claiming to be investors in the cannabis space, speculated that it showed a crop failure at a greenhouse at Canopy’s Aldergrove facility — and not a deliberate crop cull.
In a phone interview with the Post, Jordan Sinclair, Canopy’s vice-president of communications, addressed the video publicly for the first time. “We have not experienced crop failure at Aldergrove. The problem at Aldergrove is that we didn’t have the licenses in hand to be able to harvest the crop.”Cultivating cannabis in massive greenhouses, at such scale, has never been done before and is bound to come with its fair share of challenges.
“Greenhouses across North America have had a difficult time adjusting to growing cannabis at scale,” said Jason Zandberg, a special situations analyst at PI Financial who has observed and documented the cannabis industry for almost four years. According to Sinclair, the characterization of Aldergrove having a “sea of brown plants” at one point, was “not accurate.”
Then there is the question of Canopy’s licensing with Health Canada. In both Aldergrove and Delta, Canopy only has a cultivation licence from the government, meaning that once harvested, cannabis cannot be processed or packaged at BC Tweed. It is still not clear whether Canopy had applied for a processing or sales licence in the past for its BC Tweed facilities under the Access to Cannabis for Medical Purposes Regime or under the Cannabis Act. In separate conversations, neither Sinclair nor company spokesperson Caitlin O’Hara directly responded to those questions.
But Canopy is currently shipping unfinished product to its headquarters in Smiths Falls, Ont., in order to be processed and packaged, an unusual strategy that the company says is deliberate. Canopy has dominated coverage of the sector, often making the first and biggest splashes when it comes to new trends and developments.
“We are concerned by the company’s low inventory levels and believe that it could impair its ability to sustain near-term growth. In our view, Canopy’s competitors could catch up with better inventory availability and significant capacity expansion plans,” wrote Martin Landry, an analyst at GMP Securities Ltd.
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