By Eric Vengroff, Financial Analyst, Cannabis Daily
While some of Canada’s best-known names in the cannabis industry were grabbing most of the sunshine in the media, Biome Grow (CSE:BIO) (Frankfurt:6OTA), a late-stage entrant into the cannabis space, but led by a capital markets team that had raised funds for many of the early-stage players, built its game plan and its relationships.
When combined with Biome’s Antigonish, Nova Scotia-based Highland Grow, Then yesterday, the company announced that its Newfoundland and Labrador brand, Back Home Medical Cannabis Corporation entered into a massive 24,000 kg three-year production and supply agreement with the Province of Newfoundland and Labrador.
It was the largest cannabis supply agreement in Atlantic Canada and one of the top five largest deals of its kind and demonstrates the company’s deep commitment to the future and employment prospects for Atlantic Canada.
To put it in comparison, Biome’s agreement is roughly the same over three years but with larger annual commitments in terms of weight than the deal that Canopy Growth signed with the Newfoundland government last May wherein they would supply 8,000 kg./yr. with four retail outlets.
Back Home’s new $60 million production facility will operate from Barachois Brook on the west coast of Newfoundland is the beginning of a 20-year deal that will give it a window to reduce its operating costs, fine-tune its operations and recover most of its costs over time through reduced taxes to the Newfoundland and Labrador Liquor Corporation (NLC).
Additionally, Biome’s five retail licenses positions the company to benefit from a future of vertical integration from seed to sale. This kind of innovative thinking will help to secure shareholder value for the long term and make Back Home a trend-setting brand in the province.
As has been noted by Andy Bell of BNN and many others in various media, that with provinces controlling distribution of legal cannabis similar to alcohol, but with the opportunity to create local employment through the cultivation and end-use production of the products that will go into the retail outlets, cooperation and work with the provinces is high on the agenda of most growers. This deal will create approximately 200 local jobs at the facility and the stores and create stability and growth opportunities in areas where seasonal and temporary work along with higher rates of unemployment have prevailed – a win/win for business and society.
Led by Khurram Malik, the first research analyst in North America to publish a report on the cannabis sector and strategic advisor to over 20 cannabis companies around the world including applicants and licensed producers in Canada, and a board of directors comprised of former Ontario Health Minister George Smitherman, pharma executive Mark Lievonen, and beverage industry executive Steven Poirier, Biome is an experienced team that has the network connections and expertise to build similar relationships and scale in the other provinces where Biome has operations.
The company’s three growers in the Maritimes plus the recently announced Great Lakes Cannabis Co.in Norwich, Ontario, have collectively close to 390,000 square feet of production capacity in operation in Atlantic Canada and Ontario. If the scale and importance of the Newfoundland and Labrador-based Back Home Cannabis can be replicated in the other Atlantic provinces, already known for their prodigious consumption of cannabis, Biome Grow could be a force to be reckoned with in the Canadian cannabis space.