CannTrust Holdings Inc (OTCMKTS:CNTTF) has proven to be quite the cannabis runner for investors and traders. Over the past year, the stock has gone from $10 to $5 to $8 to $5 to $12 and to under $5 again. Now, CannTrust is climbing back up the charts as we start the New Year. Many are asking if we are going to see new highs in 2019. Let’s take a deep dive and see for ourselves.
First up, a little background info for those that are not familiar with CannTrust. CannTrust is a federally regulated licensed producer of medical and recreational cannabis in Canada. Founded by pharmacists, CannTrust brings more than 40 years of pharmaceutical and healthcare experience to the medical cannabis industry and serves over 60,000 medical patients with its dried, extract and capsule products. The Company operates its 450,000 sq. ft. Niagara Perpetual Harvest Facility. The industry’s broadest product portfolio is prepared and packaged at the 60,000 sq. ft. manufacturing center of excellence in Vaughan, Ontario.
CannTrust is developing nanotechnology to develop new products in the medical, recreational, beauty, wellness and pet markets. The Company has established its international footprint through a strategic partnership with Cannatrek Ltd. in Australia and a joint venture with STENOCARE in Denmark. The Company has also partnered with Breakthru Beverage Group through Kindred Canada, for recreational distribution in Canada. CannTrust is committed to research and innovation. Its partnerships with McMaster University in Ontario and Gold Coast University in Australia were designed to contribute to the growing body of evidence-based research regarding the use and efficacy of cannabis. CannTrust was proudly voted Top Licensed Producer of the Year at the 2018 Canadian Cannabis Awards.
Phase III Construction
CannTrust has obtained the necessary permitting from the Town of Pelham to proceed with its Phase III expansion with the construction process set to commence immediately. The revised Phase III expansion is permitted for a footprint of up to 390,000 square feet, compared to the 600,000 square feet in the Company’s initial application. However, with enhancements to the Phase III facility above and beyond the specifications initially contemplated, CannTrust maintains its total production capacity forecast of 100,000 kg per year after completion of the Phase III construction.
The enhancements to the Phase III expansion include investing in automation and a higher level of climate control. Given these enhancements and the time it has taken to obtain permitting, construction of the Phase III expansion is expected to be complete in the third quarter of 2020. Initial harvest from the Phase III expansion is expected in the second quarter of 2020 and full production capacity is expected in the second half of 2020. In order to address local concerns from the emission of light from its facilities, CannTrust is proceeding to add additional fan ventilation so its shades can be completely closed, at minimal incremental cost.
Given the very high demand for the Company’s medical and recreational products, CannTrust had been considering many alternatives to increase capacity beyond the Phase III expansion. CannTrust is in discussion with other greenhouse operators and is also considering advancing outdoor crop production on the same site as the Phase III expansion. Outdoor crop production requires permitting from Health Canada, is a very low-cost option and the crop can be used to formulate the Company’s extract products. CEO Peter Aceto said:
“While we work with the municipality, we are actively taking steps towards achieving our first harvest in the fall of 2019 and 100,000 kg of capacity by year-end 2019. The use of other greenhouses and outdoor crop production are both viable options that can help us meet our production targets. If developments change our production targets, we plan to communicate that with investors.”
Currently trading with a market cap of $723 million, CNTTF is an exciting name among cannabis plays. With its expansion plans and application for NYSE listing, we belive 2019 is going to be a big year for CNTTF. Look for new highs this year.
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Disclosure: We have no position in CNTTF and have not been compensated for this article.
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