Newstrike Expands Production Capacity with New Facility

In an effort to ramp up their production capabilities Newstrike Resources (TSXV:HIP), announced on July 13 that it had acquired a greenhouse facility accounting for 16.6 acres of land in the Ontario’s Niagara region for approximately $7.3 million.
This new facility joins Newstrike’s main one in Brantford, Ontario, which will allow the company to increase production as they gear up for the legalization of adult-use cannabis in Canada next year.
“Our expectations from an overall production of cannabis capacity we expect that first of two phases will allow us production around 14,000 kilograms per year,” Jay Wilgar, CEO of Newstrike told The Investing News Network (INN). As an early estimate, the company’s wholly-owned subsidiary, Up Cannabis, indicated their annual capacity will now be 25,000 kilograms.
Up Cannabis obtained it’s Licenced Producer (LP) status on December 19, which Wilgar revealed they had originally applied for it in 2013. According to Wilgar, following the acquisition, the company must work to bring the facility up to speed on the standards from Health Canada.

Amendments to their license allows Newstrike to now produce oils

The company also recently announced that Health Canada granted them a set of updates on their production license for Up Cannabis.
As part of the amendments, Newstrike is now allowed to produce an unrestricted amount of cannabis from its main facility. The company can also now begin producing and selling oil-based products and will be allowed to increase their storage capacity to 625 kilograms of dried cannabis.
Wilgar told INN that Newstrike’s cannabis strategy includes the creation of brands that resonate with consumers and are able to develop a trust relationship that investors can count on when it comes to long-term sales.
According to Wilgar, consumers in the cannabis adult market will want consistency in their purchases moving forward.
“What we’re going through here all of us is an experiment in choice,” he said. “Allowing Canadians the ability to choose between various companies and various brands, to us is vitally important.”
Newstrike also made headlines this year when it announced a strategic business partnership with the Canadian band, The Tragically Hip. Wilgar said the grouping wasn’t merely promotional, but instead a business partnership.
Since it launched under the symbol  HIP on June 1, Newstrike’s shares have soared 134.48 percent.

Investor Takeaway

The move by Newstrike to expand their production capabilities indicates a need for more product to be available as the market prepares for the legalization of recreational cannabis next year. Newstrike’s focus on brands and consumer relationship also speaks to the need for some of these LP’s to set themselves apart in the eyes of the consumers.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.