How Canopy Growth Corporation Is Ramping Up Its Capacity
By Adam Jones
Mar 9, 2018 | 9:01 AM
Meeting demand
It’s natural that companies are anticipating high provincial demand for recreational cannabis (HMLSF) and ramping up their production capacities. However, the full scale of demand may not be reached in the first year following legalization.
Canopy Growth (WEED) recently said, “It will take two years and possibly longer to rollout the full network of regulated cannabis retail stores that is required to satisfy consumer demand.” This also gives producers time to gradually build their capacities. Let’s look at what Canopy Growth is up to on that front.
Canopy Growth’s pipeline
In the chart above, we can see that Canopy Growth has plans to build ~5.7 million square feet of capacity, including indoor as well as hybrid greenhouse projects, in different provinces in Canada by 2018 and 2019. The current completed licensed capacity accounts for only 13% of this total expected capacity. Almost 85% of these capacity additions are underway. The company is also exploring ~150,000 square feet of potential sites in Newfoundland and Labrador.
Canopy Growth has been around in the medical marijuana market for some time. However, the company’s ramping up capacity to almost eight times more than its current capacity indicates that the demand from the recreational cannabis market will be much higher than in the medical cannabis market. This makes sense given that any adult can access cannabis for recreational purposes, with the only limitation being age—as opposed to the medical market, which requires some preconditions to be met before accessing cannabis.
Market overlap
Of course, with just any adult being able to access cannabis following its legalization in mid-2018, some may wonder whether the medical market will merge with the recreational cannabis market. It remains to be seen how this will play out, but the answer isn’t a simple “yes.” Companies such as Canopy Growth, Aurora Cannabis (ACB) (ACBFF), MedReleaf (MEDFF), and Aphria (APHQF) will continue to develop medical cannabis under separate divisions.
