Stockwatch Article.....laughing at Hexo's Colorado quonset
. Canadian cannabis grower Hexo Corp. (HEXO) edged up five cents to $7.22 on 1.68 million shares, after acquiring its very first facility outside Canada, in Fort Collins, Colo. It has bought a manufacturing facility spanning 50,000 square feet.
Fifty thousand square feet is slightly smaller than a standard NFL football field. For context, Hexo's main Canadian facility, in Gatineau, Que., covers 1.29 million square feet (including greenhouse space). The company made up for the U.S. facility's small footprint with some outsized boasts. "The Colorado facility will allow us to successfully execute on our U.S. strategy," proclaimed co-founder and chief executive officer Sebastien St-Louis. He emphasized that the facility is "zoned for production of a full range of cannabis products."
"Zoned for production" does not mean "actively producing" or even "capable of production." Although Hexo did not mention a single financial detail of the purchase in its press release, a recent SEDAR filing showed that the facility needs anywhere from $16.5-million (U.S.) to $49.5-million (U.S.) of retrofitting and upgrades, on top of the initial purchase price of $6-million (U.S.). The filing did not specify when the facility will be usable.
Certainly the facility is a long way off from producing Mr. St-Louis's "full range of cannabis products." Hexo will initially use it to make beverages infused with hemp-derived CBD, as part of its cross-border joint venture with Molson Coors. The joint venture is called Truss. In Canada, Truss makes cannabis beverages containing both THC and CBD, but as cannabis is federally banned in the United States, Truss sticks to legal hemp-derived CBD on that side of the border. Mr. St-Louis has said Truss, and Hexo more broadly, has no plans to make a big push into the U.S. cannabis market until cannabis becomes federally permissible.
For now, Truss's U.S. CBD beverages are available in most liquor stores in Colorado. Hexo and Molson Coors have been relying on contract manufacturers to make these beverages. The new 50,000-square-foot facility in Fort Collins means that Hexo can now handle this on its own -- to some extent, at least. Hexo has (typically) not specified the facility's planned output. (For context, the Canadian beverages come out of a 183,600-square-foot bottling space in Hexo's 932,000-square foot manufacturing facility in Belleville, Ont., where Truss has pegged the capacity at 200 cans or bottles per minute.) Also left unspecified were the types of future products that Hexo wants to eventually produce. Mr. St-Louis merely said the facility "offers a variety of operational capabilities."