Marijuana Stocks From The Produce Aisle?

As global demand for medical marijuana grows and the legalization of recreational marijuana increases, capacity for its cultivation is at its best. With Canada moving towards legalizing adult-use recreational marijuana this summer, most Canadian cultivators are expanding their growing capacity through building greenhouses and through acquisitions. But, there’s another way these companies are preparing to meet the increased demands of marijuana and that is through deals with various produce companies.

One of the largest growers of greenhouse tomatoes, bell peppers, and cucumbers in North America is Village Farms (VFFIF). But in 2016, the Canadian company’s CEO Mike DeGiglio recognized the opportunity for Village Farms in the Canadian medical marijuana market. This resulted in a partnership with Canadian medical marijuana cultivator Emerald Health Therapeutics (EMHTF) to form their joint venture, Pure Sunfarms.

Village Farms has begun to convert a 25-acre greenhouse facility to grow marijuana instead of produce, which is scheduled to be complete in February. However, the company’s stock price has sure seen benefits of the arrangement, gaining almost 535% in 2017. DeGiglio stated that growing marijuana at the facility should generate more revenue than all the company’s present operations. This should result in the company becoming more profitable.

Similarly, one of Canada’s main medical marijuana cultivators, Aurora Cannabis (ACBFF), announced a joint venture with Scandinavian tomato grower Alfred Pedersen & Son (APS). This joint venture, dubbed Aurora Nordic Cannabis A/S, will supply medical marijuana to Denmark, Sweden, Norway, Finland, as well as Iceland. Aurora Nordic is also constructing a 1 million-square-foot facility which will concentrate solely on marijuana cultivation with a projected production capacity that can surpass 120,000 kg annually for the European medical marijuana market.

I’m uncertain if investors can find a good marijuana stock when walking down their produce aisle. But, there certainly is a trend going on between Canada’s marijuana cultivators and produce growers teaming up to help meet demands. And, with the legal marijuana market forecast to reach $22 billion by 2021, these marijuana stocks may have more room to grow.

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