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My notes from a recent call to VFF.
Spoke with Village Farms IR. I found them to be very straight forward, transparent, and realistic about their growth plans and the industry as a whole.
Here are some of the bullet points of the discussion:
They haven't applied for the license yet. They want to get it absolutely right, and not have to call back inspectors afterwards if they get something off, delaying the process further.
Their goal is to have the license in hand to grow in 2nd Quarter 2018, and the license to sell in 3rd Quarter 2018. I feel they could easily get behind and this turn into late 4th Quarter 2018.
The facility will start with 250k square feet. Their goal is to reach 1M square feet by 4th Quarter 2019. They have the cash to grow from April through November. It will require more money to install lights to grow in the other months, and they want to do this. They said they have enough money to grow all 1M square feet, if they didn't use lights. Again, they want to go all year round, and plan to install lights throughout.
They hope to not have to raise money through equity financing. They believe banks in Canada will start lending, and they have good relationships to get debt financing.
They seem very skeptical on the industry as a whole in their ability to scale and timelines for reaching certain square footage. They are monitoring competitors and don't see them in the growth stages of their greenhouses that they may be alluding to. I took it that their expertise in greenhouse growing has them believing that others are too optimistic about how quickly they can scale.
Village Farms is clearly very methodical and diligent. Cannabis is clearly an opportunity they want to capitalize on. Nobody knows the distribution rules from Health Canada yet. Remains a big unknown. Their relationships with supermarkets and pharmacies have them hopeful they can sell direct.
They like working with Emerald. Leveraging their relationship for licensing, and believe their genetics may well fetch higher prices for the medicinal properties they have patented. Emerald is trying to secure supply, like everyone else. VFFIF gives them this ability. Demand for cannabis is predicted to outstrip supply for several years, and people are scrambling, along with HC, to build out infrastructure to supply the market.
If I think of anything else, will pass along.
I am very bullish on VFFIF and EMHTF, but it may be a very boring investment for the next 3-6 months. I plan to accumulate on dips, believing it will double from here by March to May 2017. I believe VFFIF will prove to be the lowest cost producer, and that their expertise and diligence will the the tortoise of the industry that wins the race. If they do that, this will go to $2B+ market cap in 2019 or 2020.