It is a moving target.
When Royal Canadian Cannabis (RCC) chief executive officer Jake Burlet and chief financial officer Jason Theis last visited Barrhead in October, they stated that if all things went to plan, the proposed $30 million 53,000 square-foot medical marijuana facility would be in production within the year.
RCC had previously announced in late June 2018 that they would be building its facility in the County of Barrhead’s Kiel Industrial Park.
But it turns out the original projection was premature — the new timeline has construction beginning sometime in the next quarter and full production starting up in three to five years.
That is what Burlet and Theis told an audience of about 25 people during a July 17 information session at the Seniors’ Drop-In Centre.
“The one thing about the cannabis industry is that you can never have too much money, and whatever the timeline is, you can throw it out the window because it is probably going to change,” Theis said.
One of the reasons for the new timeline is that it took longer than they projected to receive their first certification from Health Canada.
“It is a long, complicated and expensive process ... From when we first submitted our application to when Health Canada completed their review, it took two years and a six-figure budget,” Burlet said. “Just to give you an idea of the complexity and scope of the process, our submission to Health Canada was three binders with about 650 pages of required documentation.”
Now that they have received Health Canada’s permission to do so, they can move on to the next stage of the process, which is to construct the building’s shell, complete with two growing rooms. At that point, RCC will have to get additional approvals from Health Canada before going into full-scale production.
Burlet and Theis said they believe the effort and expense will be worth it.
In Canada, it is estimated that the cannabis industry is worth $3 billion and that it will double once edibles are introduced in the market in three to four months, Theis said.
However, Burlet said that recreational use accounts for the majority of that market and RCC is strictly focusing on the medical marijuana market.
In Canada, the medical marijuana market is estimated to be $1.2 billion and is forecast to increase to $2.4 billion by 2024.
“We’ve seen a consistent rise in the number of patients that are registering to use cannabis,” Theis added, saying the market has the potential to grow even more.
“The medical marijuana market isn’t new,” he said, noting medical marijuana was legalized in 2001 but noted until recently relatively few people used the product.
Burlet said there are a couple of reasons for this, the first being that until recently, there has been relatively little scientific data available on its medical benefits.
The other, he added, is that there was a stigma attached to medical marijuana, so relatively few doctors were prescribing the product.
“But again that is changing as doctors learn more about it,” Burlet said.
He added that although the medical side is growing exponentially, it is being served by relatively few growers, noting that only five per cent of the 190 licences produce medical products.
“The reason why more producers don’t gravitate towards the medical side is that it is significantly more complex and expensive to produce a pharmaceutical-grade product,” he said, adding that in RCC’s case, the construction of their facility is even more difficult and costly because they want to export to the lucrative Western European market.
To do that, RCC has to build the facility to European Union Good Manufacturing Practice (EU-GMP) a process that is even more stringent than Health Canada’s requirements.
In addition to being a much larger market, Burlet said in many western European countries, private insurance companies cover medical cannabis as part of their extended medical plans.
“That is not the case in North America, but we anticipate that will change in the coming years,” he said.
Theis added that by building their facility to the more stringent EU-GMP standards, it opens the possibility of accessing additional markets as more countries legalize medical marijuana.
“[Today] there are 44 countries that allow medical cannabis but more and more are coming online every month. Western Asia is starting to get the itch and understand its value,” Theis said.
Burlet added that by accessing different foreign markets, also protects the company from trade issues that could impact sales.
Why Barrhead?
Burlet noted originally RCC’s facility was slated for southern Alberta, but they decided against it, finding Barrhead a better fit for their needs.
One of the pluses for Barrhead is its proximity to Edmonton which aids in shipping.
The other is the amount of suitable land available at the Kiel Industrial Park which allows them to construct a facility from the ground up rather than trying to retrofit an existing building.
“There is no shortage of 30,000 to 100,000 square foot buildings in metropolitan Edmonton that are just begging for a tenant, but it doesn’t work for a pharmaceutical-grade facility,” he said. “Kiel Industrial Park allowed us the opportunity for a greenfield site where we can expand.”
Burlet noted that after the initial phase is complete, RCC has plans to build two more growing facilities on its five-acre property.
More importantly, Burlet said it was because Barrhead has always been a “forward-thinking” agricultural area.
“(It has) people with good horticultural and crop growing skills in a horticultural area that has a business-friendly mindset,” he said. “We push enough water uphill; it’s nice not to have to fight for every square inch of real estate.”
Local opportunities
Even though the facility will be highly automated, Burlet and Theis said there would be opportunities for local businesses and residents. In Phase 1, the plant will employ upwards of 50 people.
“We will need all types of people, administrative, growers, quality control, shipper/receivers, and security. There will be opportunities and that number will increase in subsequent stages. Over three facilities, I would say (we will have) over 100 employees, and in most of those cases, we are going to be looking to fill those spots with local people,” Theis said.
