VIDEO: Aphria Inc. (TSE:APH) Leamington Cannabis Grow Operations

Transcript:

James West: I’m James West. Welcome to another edition of the Midas Letter’s Cannabis Video Series. Today, we travel to Leamington, Ontario: home of licensed producer Aphria Inc. (TSE:APH), one of the few 100 percent greenhouse growers in the public markets.

Vic Neufeld:   If you understand Mother Nature, and what really does a plant need, it’s a very tailored process. It’s way ahead of our competition. A good crop is two things: are you maximizing yield per plant or per square foot, and secondly, is the potency that you’re expecting to test for, you actually got. So you could have one without the other, and then, nah…I want both.

Cory Cacciavillani:  Yeah. So there’s obviously things that we have to tailor towards the cannabis plant, but the science behind growing plants, especially on a commercial scale like we’re doing here, really is all of the same. Obviously, supplemental lighting; screens over the vents to stop bugs from entering the facility; we have blackout curtains to force the plants into production; we have shade curtains if we want to shade the plants on a day that’s too sunny. Heated concrete floors to help with the plants growing in the winter…

James West:    So Dave, tell me: what is the purpose of these stickers? What are they, what do they do?

David Janik:   So this is a QR code, bar code. By the ACMPR, we have to track every plant from seed to sale. So we can put any type of information we need on this bar code: the mother that it came from, what stick week it is, what variety it is, the strain, when we transplanted it, when we took the cutting of it, when we put it into the soil, and when we harvest it.

James West:    Technology is a major focus for modern greenhouse farming.

So you can essentially turn day into night, and back again?

David Janik:   I can. I can demonstrate that for you right now off my phone. With technology, as long as I can get a cell phone service, I can control any aspect of this greenhouse through my phone.

So right now, the sun sets around 8:00, 8:30 for us, but I have it this dark in here by about 6:30 every night. We don’t like fighting Mother Nature; all plants, no matter where they grow in the world, in their DNA they have responses to the natural sunlight. We can mimic a lot of that in a greenhouse or in an indoor facility, but you still can’t replace natural sunlight.

James West:    Aphria stressed the importance of oil products going forward, and we looked at the extraction process.

Cory Cacciavillani:  This is the extraction room. It goes through a number of dilution processes, where they actually start cutting the pure product with what we call NCT Oil. That’s kind of where Vic’s background and our Chief Science Officer kind of kicks in.

James West:    A major focus for Aphria is their expansion in progress.

Cory Cacciavillani:  You’ll see nothing but different sizes of plants here.

James West:    And this is just Phase II?

Cory Cacciavillani:  Just Phase II. This is 57,000 feet you see here.

James West:    Fifty-seven thousand?

Cory Cacciavillani:  Yeah.

James West:    Wow.

Cory Cacciavillani:  Phase III is 200,000. Just think of that: so, three and a half times this size, and 350,000 feet of infrastructure. See, when other LPs talk about their numbers, they embed everything in one.

James West:    Right.

Cory Cacciavillani:  I am trying to be a little more better fully disclosure. It’s a million square feet of what you see here. A million square feet is huge. It is absolutely the biggest of any LP in Canada, and this isn’t talk; you saw all the land. Again, this is not we’ve got to buy our land; no, no, we got it. We’ve got to get funding? No, we’ve got the capital in the bank. We got to get in shearing (phon)? No, it’s done. Site plan with the City of Leamington, done. Posts are going in next week for Part Three.

Vic Neufeld:   Since November, Aphria is selling what we’re growing. We are absolutely maxed out. We’re already dipping into our vault structure. So what we’re growing every month, every week, is what we’re selling. Be very cognizant of licensed producers who are building up vault full after vault full of inventory, because one day, that balance sheet inventory has to hit the income statement. And when it’s reversed, it’s going to be damaging to that income statement. Aphria is not in that situation.