Cannabis producer secures $112 million in private placement financing

Written By: Jen Neville
February 26, 2018

cannabis operators

Headquartered in Hamilton, Ontario, The Green Organic Dutchman Holdings Ltd., known as “TGOD”, had formed strategic alliances with industry leaders with a view to becoming the world’s largest organic cannabis company. To achieve this goal, the company had taken an approach unique in the cannabis industry, by growing cannabis organically at a low cost, expanding its cultivation facilities to scale, hiring world class senior management and forming strategic partnerships with major players, including Eaton Corp. (one of the largest power management companies) to lower electricity costs and Ledcor Group, the second-largest construction company in Canada.

TGOD cultivates farm-grown, organic and synthetic pesticide-free medical cannabis using all natural, organic craft growing principles. The company has been licensed to produce medical cannabis under Canada’s Access to Cannabis for Medical Purposes Regulations. TGOD is currently performing a 970,000 square foot expansion to its cultivation facilities, which will enable the company to produce 116 tons of cannabis annually. This expansion project is scheduled to come online in phases, beginning in 2018, to meet the increased demand expected with the legalization of recreational cannabis throughout Canada.

TGOD had recently announced that it had secured $112 million in private placement financing, which included a $55 million strategic investment by Aurora Cannabis Inc., an established company in the marijuana industry. This investment will fully fund TGOD’s planned expansion. Its strategic partnership with Aurora positions TGOD’s cannabis production facilities to be among the largest and most technically advanced in the world.

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The project management consortium for this expansion included Eaton Corp. and Ledcor, who would report to TGOD management on project progress. Both of these companies claim to have extensive international experience in power, project and construction management.

Eaton devises energy-efficient solutions for the efficient management of electrical, hydraulic and mechanical power. Ledcor would ensure an accelerated production schedule by using advanced multidisciplinary design/build processes and implementing scalable operational and project plans. These companies would deploy their world-class project teams to ensure that the projects are completed on time and on budget.

According to sources, with this massive expansion to its facilities in Ontario and Quebec, and by leveraging innovative technology and low-cost power solutions, TGOD could be positioned as one of the most cost-efficient, high-quality cannabis producers in Canada. The company had formed an alliance partnership with Hamilton Utility Corp., which had enabled it to reduce its power cost from $0.13 per kWh to less than $0.05 per kWh. TGOD’s position as a low-cost cannabis producer would be strengthened in Quebec, the province with the lowest power rates in Canada, which could be as low as $0.04 per kWh.

TGOD had also planned to secure a share of the growing cannabis oils market. It had commissioned a purpose-built extraction laboratory, a commercial-scale CO2 extraction unit which can process up to 12,000 kg of raw material per year for the production of around $170 million worth of organic cannabis oils. Cannabis oil is a critical raw material for the production of several recreational market verticals, including topicals, edibles, concentrates and beverages.

Plans for a public listing with the Toronto Stock Exchange are apparently underway, with the launch of an initial public offering expected imminently.

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