Delta 9 Cannabis (Up 20%) Receives Approval for Processing Expansion

Delta 9 Cannabis

Rich first profiled Delta 9 Cannabis (TSX:DN) (OTCQX:VRNDF) at the end of March. He and Delta 9’s CEO, John Arbuthnot, discussed the company’s response to the COVID-19 crisis, as well as its fourth-quarter and full-year fiscal results.

Back then, the company’s share price was hovering around $0.40. Three weeks later, DN stock is up 20% and trading today at $0.50. What’s more, the company has some big news to report that promises to have a significant effect on operations going forward.

“I’ve told you guys, this is one of the underappreciated, undervalued, and underexposed stocks in the cannabis sector,” says Rich. “They’ve got some big news today, so let’s break it down.”

Delta 9 Cannabis Receives Approval for Cannabis Processing Center

Yesterday, Delta 9 announced that Health Canada granted approval for its new purpose-built cannabis processing center. This center will allow the company to bottle, package, and label its consumer-packaged dried cannabis products.

Once it’s operating at capacity, the fully-automated center will allow for processing of up to 25,000 kilograms per year of dried cannabis.

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CEO John Arbuthnot says that the approval from Health Canada will allow Delta 9 to “streamline” production. As a result, the company expects to “bring consumer packaged cannabis products to market more quickly.”

He adds:

“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.”

Next Step: Phase II Expansion

But Delta 9 Cannabis is not ready to rest on its laurels quite yet. Next, the company is working to expand the production perimeter at its Health Canada-licensed cannabis production facility in Winnipeg, Manitoba.

The expansion will focus on the construction of additional buildings. These buildings will bring the total licensed square footage to approximately 135,000 square feet. Currently, 80,000 square feet have already been licensed by Health Canada.

Fortunately, Delta 9 does not anticipate that the expansion of the license will cost anything.

After the expansion, the company anticipates that it will have up to 420 licensed grow pod cultivation systems. This will potentially increase the overall capacity by 3,650 kilograms per year, bringing overall production capacity to 11,975 kilograms per year.

Delta 9 Cannabis expects that the additional grow pods will cost approximately $7,000,000. This will be funded from operations and cash on hand.

Will This Affect DN Stock?

“These guys are still completely under the radar, despite the fact that they just had their first profitable quarter,” says Rich. “They’re one of the companies that’s actually growing and doing this the right way. So many other companies are losing money.”

As stated above, Delta 9’s shares has been trending upward for weeks. At $0.50, however, DN remains far from its 52-week high of $1.65. It’s currently much closer to its year-low of $0.33. This means that, if you’re thinking of taking a position in the company, its price today is relatively attractive.

What do you think? Is Delta 9 Cannabis a good play for the pot sector right now? What other companies are proving that cannabis companies can be profitable? Let us know your thoughts and, as always, keep tuning in to RichTV Live.

Featured image: DepositPhotos © [email protected]

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