Vancouver-based Chlormet Technologies (
TSX:V.CMT,
Stock Forum) has
announced the identity of the private medical marijuana grow facility that it is looking to invest in as part of a change of focus toward that growing sector.
The company, previously referred to as ‘PrivCo’, is AAA Heidelberg, a London, Ontario-based company with a secure 8,800 square foot commercial building that it hopes to have licensed by Health Canada for continued grow operations of up to 1320 lbs of product in the first year.
Chlormet has paid
$120,000 for a 16.5% equity interest in the company, and has an option to buy the remainder for 16 million common shares. Chlormet has agreed that it may need to front a loan to AAA Heidelberg before closing the deal, to aid in its licensing push.
AAA Heidelberg is deep in the application process and is currently building out its facility to Health Canada guidelines. Upon completion of the building and a successful Health Canada inspection, the company expects to be approved to grow under new regulations.
The company employs what Chlormet calls “an experienced grow master” and is currently licensed under old regulations that were expected to cease on April 1 before a judge issued a stay against that order. As a result, the firm continues to grow ten strains that it predicts will sell for $5 to $15 per gram.
Chlormet has also announced receipt of an ‘independent economic analysis’ of the opportunity, which reveals some detail of what companies seeking a license are going through to get one, saying “The new regime requires a degree of supply chain and logistical sophistication well beyond the means of those who have, up to this point, grown for their personal use."
“The new regulations suggest that the medical marijuana industry will be put on the same footing as the pharmaceutical manufacturing sector,” the report says. “The regulations are quite onerous in terms of production distribution and security standards. Health Canada will only issue licenses to producer/distributors that they deem capable of meeting these detailed regulatory standards. That suggests that Canada will very rapidly evolve from a market of thousands of informal producers to one of a much smaller number of sophisticated producers."
Chlormet stock was up 6.1% on the news, to $0.26. The stock sold for as little as $0.03 in January, prior to the change of direction announcement.
The company has a market cap of $5.4 million with 20.9 million shares outstanding.
@ChrisParry