Delta 9 Receives Approval from Health Canada for Expansion to Processing Area
WINNIPEG, MB – April 13, 2020 – DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: VRNDF) (“Delta 9” or the “Company”), is pleased to announce it has received Health Canada approval for its new purpose-built cannabis processing center which will allow for fully automated bottling, packaging, capping and labelling of its consumer-packaged dried cannabis products. The Company anticipates that once the processing center is operating at capacity it will allow for processing of up to 25,000 kg/year of dried cannabis flower material.
“We have increased our licensed cannabis cultivation output significantly over the past two years to our current 8,325 kg/year capacity. This approval will allow us to streamline and automate our packaging and labelling activities and improve our ability to bring consumer packaged cannabis products to market more quickly,” said John Arbuthnot, CEO of Delta 9. “The excess capacity in the new production line will also allow us to source premium cannabis flower from other licensed producers, including the Company’s micro-cultivation partners, for sale through our wholesale and retail distribution network.”
Phase II Expansion
The Company is now working to expand its Health Canada licensed cannabis production perimeter to include additional buildings at its licensed production facility in Winnipeg, Manitoba (the “Delta Facility”) which will bring the total licensed square footage to approximately 135,000 square feet, from 80,000 square feet currently licensed by Health Canada. The Company anticipates there will be no cost to this licensed area expansion.
The Company also wishes to announce that in light of the COVID-19 pandemic, it is has paused its previously announced expansion plans and capital deployment for the remaining Phase II areas of the Delta Facility. The expansion will continue once the Company has greater certainty regarding the capital markets, macro economic conditions and global health conditions.
“In light of the current health crisis and capital markets environment we are taking a more conservative approach to capital deployment,” said John Arbuthnot, CEO of Delta 9. “Our goal is to ensure that our current licensed production assets are operating at design capacity and we achieve efficient sell through rates while continuing with our organic expansion strategy.”
The Company anticipates it will ultimately have up to 420 of its grow pod cultivation systems (“Grow Pods”) under license as a part of its Phase II expansion that would potentially increase the overall capacity by 3,650 kg/year with overall production capacity for the Delta Facility at 11,975 kg/year. The additional Grow Pods will be placed within existing warehouse space at the Delta Facility and the capital expenditure of approximately $7,000,000 would be funded from operations and cash on hand.
For more information contact:
Investor & Media Contact:
Ian Chadsey VP Corporate Affairs
About Delta 9 Cannabis Inc.
Delta 9 Cannabis Inc. is a vertically integrated cannabis company focused on bringing the highest quality cannabis products to market. Delta 9's wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical and recreational cannabis and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand. Delta 9's shares trade on the Toronto Stock Exchange under the symbol "DN" and on the OTCQX under the symbol VRNDF. For more information, please visit www.delta9.ca.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to: (i) increases in Delta 9’s cannabis production capacity; (ii) the completion of Delta 9’s cannabis processing center; and (iii) the completion of Delta 9’s Phase II expansion and the costs thereof. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including the Company’s ability to complete the Phase II expansion as well as all risk factors set forth in the annual information form of Delta 9 dated March 19, 2020 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.