The Green Organic Dutchman is considering the sale of its mammoth cannabis greenhouse in Salaberry-de-Valleyfield, Quebec, approximately two months after the Mississauga, Ontario-based licensed producer increased its stake in the property to 100%.
“Multiple bids are being considered, and the transaction could result in a complete or partial sale of the site,” the company disclosed last week.
In December 2020, the Green Organic Dutchman purchased the remaining interest in QuébecCo it did not already own, a company spokesperson confirmed to Marijuana Business Daily.
“We simplified the ownership structure ahead of a potential sale,” the spokesperson said, adding that the financial details will be included in the upcoming fourth quarter filing.
Back in 2018, the company purchased a 49.9% stake in QuébecCo, which it said at the time held the property in Quebec. It added an additional 6.25% to its position last October before increasing it to 100% in December.
The greenhouse was designed to grow 185,000 kilograms of cannabis annually, according to an investor presentation on the company’s website.
The Green Organic Dutchman said it decided to use the site, which it calls its “Valleyfield site,” as a processing hub in 2019.
Citing primarily the pandemic, the company “temporarily” ceased construction at the Quebec facility and laid off the majority of its staff in March 2020.
The massive structure, measuring 1.31 million square feet in size, came to fruition amid a fierce building spree in the months before and after Canada ended marijuana prohibition in late 2018, in which investors financed, and licensed producers built, significantly more growing capacity than the industry needed.
Many of the largest producers have sold off the greenhouses for a fraction of what they put into them.
The building spree led to aggregate losses in excess of 10 billion Canadian dollars ($790 million) for a group of licensed producers that includes Canopy Growth, Aurora Cannabis, Hexo and others – largely due to write-downs stemming from overproduction.
In last week’s press release, the Green Organic Dutchman said it plans to keep its “cannabis 2.0″ manufacturing in Quebec.
“Based on current market forecasts, (the Green Organic Dutchman’s) main greenhouse in Valleyfield could be, for the right offer, monetized to allow the Company to continue its path to right sizing and profitable operations,” the release stated.
The Canadian industry is currently sitting on a staggering 1.06 billion grams of inventory, fueled by the country’s first large-scale outdoor “croptober” harvest last year.
Following an MJBizDaily report drawing attention to the country’s ballooning inventory, Jefferies analyst Owen Bennett warned that the industry should brace for more consolidation, closures and bankruptcies amid a worsening supply-demand imbalance.
The Green Organic Dutchman trades as TGOD on the Canadian Securities Exchange.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].