Last month, Gaia Grow (CNSX:GAIA) CEO Frederick Pels guested on The Dales Report, explaining an exciting piece of news about a cost-dominant extraction process that would give the company a huge leg up on their competitors. Pels is back today to give us an update on Gaia Grow’s new 16,000 sqft expansion to their Calgary facility, and why their location was an amazing opportunity.
Here’s some highlights from the interview.
Facility expansion hopefully complete for Gaia by the holiday season
When asked when the expansion would be complete, Pels indicated that “hopefully” it would be later this year.
“We want to be in full production before the holidays,” says Pels. “Our plan to move forward here on the CSS side, the expansion into the additional 16,000 sqft will be Health Canada dependent.”
The expansion to the facility is an amendment, and Pels says it takes about six months to process by Health Canada before they can start putting equipment in and begin production on that side of the facility.
Calgary facility and expansion is a huge savings in CapEx for Gaia
Many facilities that are peers of Gaia have a huge disadvantage right from the start. It takes millions of dollars upfront to purchase and outfit a property for extraction. Pels says that the reason why their facility is based in Calgary is because they were able to take advantage of an old oil lab and repurpose it for their uses.
“As Andre likes to say, it went from black oil to green oil,” says Pels. “So a lot of the laboratory requirements were already in place. There were millions of dollars deployed in upgrading this facility by the previous tenants. So TruExtracts was able to take advantage of that, repurpose a few things, and really build an outstanding facility for very little CapEx.”
He indicates that also is true for the facility expansion. “Because the bones are already there for a laboratory, the cost to expand and build out for our use are very minimal. So that’s where this facility that excels. It’s not the biggest facility out there but we’re trying to make it most efficient and that’s the goal.”
Pels not concerned about surplus in the Canadian cannabis landscape
In an environment when many cannabis companies are struggling to move product, a facility expansion might not sound like the best move for Gaia. But Pels says TruExtracts is not at risk of running a glut of supply in their area.
“On the CBD side, believe it or not, the price of distillate has actually increased. We were looking at the market numbers trying to figure out our entry point. Demand is outpacing supply on that front,” Pels said.
“Certain edibles, certain products that were the lowest hanging fruit are definitely saturated. The inputs to make those products, however, are still in demand, and that’s where TruExtracts has the ability to shine. So, providing the bulk pricing of the inputs continues to increase, we have to pick a strategy to ensure we’re taking the largest share of that production and sales.”