Zenabis Global Inc., a Canadian licensed cultivator of medical and recreational cannabis, said it has entered into a conditional agreement for the sale its cannabis facility in Delta, British Columbia. However, the deal value indicates a price that is half the original listing price of the property.
Zenabis noted that the agreement, for the sale of land and buildings only, is for a gross purchase price of C$6.65 million. The company expects the transaction to close no later than December 30, 2020.
In a regulatory filing earlier this year, Zenabis had said that through a third-party appraisal, the fair value less cost of disposal of the Delta property was determined to be C$12.30 million.
"We are very pleased to have reached a deal for the sale of our Delta facility. Now that the Company has reached a commercial deal encompassing only the land and building of the site, we will start the process of redeploying the state-of-the-art analytical testing equipment located in the Delta facility to Zenabis Atholville," said Shai Altman, Chief Executive Officer of Zenabis.
Altman added that redeployment of the testing equipment to Zenabis Atholville will enable the company to fulfil a significant amount of its testing requirements in-house. This will allow the company to realize substantial cost savings and reduce testing lead times, compared to its currently out-sourced testing arrangements.
Zenabis has facilities in Atholville in New Brunswick; Aldergrove, Pitt Meadows and Langley in British Columbia; and Stellarton in Nova Scotia. The company currently has 111,200 kg of licensed cannabis cultivation space across four licensed facilities.
Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation as well as its propagation and floral business.
Other major Canadian cannabis companies too have either closed or sold their cultivation facilities earlier this year.
In June, Aurora Cannabis said it plans to close five smaller production facilities over the next two quarters in order to focus production and manufacturing at the company's larger scale sites.
Canopy Growth said in March it plans to close two greenhouses in Canada, resulting in the elimination of about 500 jobs. In addition, the cannabis company abandoned plans for a third greenhouse, saying that the actions are to "align" its cannabis cultivation capacity with projected demand.
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