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Delta 9 to Raise Cannabis Production, Expand Retail Network

ME Staff

Canada-based Delta 9 Cannabis (TSXV: NINE) (OTCQX: VRNDF) has unveiled plans to increase its annual cannabis production and retail store chain.

The cannabis firm said Feb. 21 that it intends to increase its annual cannabis production capacity to 60,000 kilograms per year by 2022 and expand its retail store network to four stores by the end of the second quarter of 2019.

Production Facilities Expansion

Delta 9 reported the completion of the Phase 1 of its Winnipeg production facility expansion project. Work is underway on the Phase 2 and the Phase 3 will begin in 2020.

The Phase 2 expansion is designed to increase the company’s total production capacity by 454 grow pods and provide an additional 145,280 square feet of production space on two levels.

The project is expected to increase the company’s total annual cannabis production capacity to 16,768 kilograms.

The expansion is estimated to cost around $24 million, which will be funded from current cashflow, according to the company.

Delta 9 plans to begin the Phase 3 of the expansion project in 2020. The project is expected to take two years.

The Phase 3 includes the systematic roll out of 15 modular warehouse buildings covering 480,000 square feet of production space on two levels. The project also the construction of a 30,000-square-foot in-house cannabis extraction facility.

The expansion is expected to increase total production capacity by 1,500 grow pods and would boost the total annual cannabis production capacity to 60,000 kilograms of dried cannabis.

Expected capital costs of the Phase 3 expansion project is about $115 million. Funding options for the expansion are still being reviewed, according to Delta 9.

The Winnipeg facility uses grow pod technology to produce cannabis products. Each grow pod is constructed from a repurposed 320 square foot steel shipping container and can produce approximately 32.5 kilograms of cannabis annually.

Delta 9 has selected Bird Construction Co. Ltd. to oversee the design and construction of the Phase 3 expansion.

Retail Store Network

Delta 9, through its partially-owned subsidiary Delta 9 Lifestyle Cannabis Clinic, opened its first retail cannabis store in Winnipeg, Manitoba, in 2018.

The company is currently building three more retail outlets in Winnipeg, Thompson and Brandon. Further, it has partnered with a Manitoba First Nation to open a fifth store.

In addition, Delta 9 has prequalified for the Manitoba government’s request for proposals to build additional stores in smaller, rural communities.

“Today we are pleased to provide our long-term vision to transform Delta 9’s Winnipeg based production facilities into one of the largest cannabis production, processing, extraction, and distribution centers in Canada” Delta 9 CEO John Arbuthnot said in prepared remarks.

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