A huge East Ladner greenhouse operation, that made the switch from vegetables to cannabis, is about to undergo an even bigger expansion.
In an interview with the Optimist, Mandesh Dosanjh, president and CEO of Pure Sunfarms, described how his company carefully planned its growth, navigating the unchartered Canadian legal market that had many players jumping in following the legalization of cannabis.
“There’s no doubt that year-over-year the market is growing. We’ve indexed to over the four-billion dollar mark nationally and it’s no surprise that stores have continued to open up. With normalization and legalization, we’re seeing more products and there’s no doubt the industry is growing,” said Dosanjh.
A wholly-owned subsidiary of Village Farms International, Pure Sunfarms already has 1.1 million square feet in its greenhouse operation, having the capacity to produce 75,000 to 80,000 kg of dried flower annually for the Canadian recreational market.
Pure Sunfarms has also been planning to convert a second 1.1 million square foot adjacent greenhouse for production, and half of that facility is already in full operation.
Conversion of the remaining part of that greenhouse will take place within the next six to 12 months, depending on market conditions.
Because much of the processing is taking place in the first greenhouse, the second greenhouse will have an even bigger area to grow at about 85,000 to 90,000 kg, once fully converted.
All the processing, such as drying and trimming, are done on-site. That also includes the production of edibles as well as some of the company’s vape products.
As far as how the retail and production landscape is evolving, Dosanjh said that is a bright spot at the macro level, especially since the industry is still in its infancy.
“With some of the statistics, it’s hard to report on because there’s still the illicit market and what is the true opportunity from the black market and illicit trade,” he said. “Some estimates say that, as a legal industry, we’re capturing maybe 50 per cent of the potential from the black market, so some people are saying we have a ways to go on top of the legal industry we have here today. At a macro level, the industry is growing and more stores are coming and people are getting more normalized to the product and for Pure Sunfarms our growth continues to be strong.
“We’ve reported another quarter of profitability, our 14th straight one, and we continue to show we have a really good brand and products to market, and our brand presence and our brand performance continues to grow.”
Dosanjh noted “retail deserts” where cannabis stores don’t exist or are banned, such as in municipalities like Richmond and Surrey, continue to pose a challenge, especially in getting a chunk out of the illicit market.
“I think municipalities need to embrace the stores. Those municipalities where they are banned continue to be hot spots for illicit brands because there’s no access to product, so, the introduction of stores will continue to help normalize, remove the stigma and allow people to understand the differences and benefits of legal cannabis,” he said.
Dosanjh also noted, something that the federal government is now rightly taking another look at, is the milligram content for products such as edibles and drinks, currently capped at 10 milligrams.
The lower maximum hampers the legal industry in its ability to compete with the illegal market, so making changes as part of regulatory reforms will help further shrink that illicit market, he said.
“Ongoing regulatory reform will help, whether it’s an excise tax reform, product percentages and restraints around milligram content, those kind of things will help us combat the illicit market because the illicit market in those areas are more competitive than we can be,” he added. “When you look at flower or vaping, the choices of products have never been better for the consumer in quality over the illicit market, but we need see some reform in some of those other products and points of distribution.”
Dosanjh said he commends the City of Delta for taking a leadership position in considering cannabis stores at all three of the city’s main communities.
He also noted Pure Sunfarms is currently not looking at setting up sales of products directly to consumers at the Delta greenhouse site, but are actively involved in the provincial government’s ongoing consultations on farm gate sales.
Pure Sunfarms is also providing feedback on other potential changes including direct delivery and special occasion permits.