Canopy Growth Buys Huge Upstate NY Facility for Hemp
As cannabis and hemp grow in popularity and acceptability, the world's largest cannabis company is planning a $150 million investment in New York state.
NEW YORK CITY—Canopy Growth has acquired a 308,000-square-foot facility, a former Felchar Manufacturing building at 47-51 Pine Camp Drive, on 48 acres of property in Kirkwood, NY. The town is about 10 miles southeast of Binghamton, NY. The Ontario, Canada-based cannabis company is planning to invest $150 million to convert the former vacuum parts building into facilities for hemp-derived cannabinoid extraction and processing. The new hemp industrial park will be capable of producing tons of hemp extract each year.
Although the sales price was not disclosed, an online CBRE posting on CoStar’s Loopnet listed the property for $9.5 million with CBRE Syracuse brokers Mark Rupprecht and Bill Anninos.
The acquisition represents a milestone for Canopy in its expansion in New York. Yahoo! Finance reported in Q4 2018, the company’s net revenue reached $CA83 million and had a market cap of $16 billion. Bloomberg has reported Canopy is the world’s largest cannabis company.
“As we establish a stronger foothold in the exciting US market, we want to do so in a way that prioritizes local vendors and creates meaningful career opportunities for people in the communities where we operate,” says Bruce Linton, chairman and co-CEO of Canopy. “The vision for our investment is to create an ecosystem that inspires new entrepreneurs and generates more economic stimulus than a single company can offer. As we build the facilities, we’ll also attract like-minded businesses who share our excitement for the emerging hemp and hemp-derived cannabinoid markets.”
The US Farm Bill that passed in December 2018 allows for the cultivation of the industrial version of hemp, eliminating it from the federal list of controlled substances. Industrial hemp is defined as cannabis that contains less than .3 percent of THC (tetrahydrocannabinol, the principal psychoactive ingredient). Marijuana contains a much higher percentage of THC.
New York state granted a hemp license to Canopy in January. The company plans to hire local construction contractors to retrofit the facility. It will recruit senior leadership in late 2019 and a full workforce in mid 2020. It anticipates the operations will create hundreds of new, local full-time jobs, in addition to the construction work. Canopy has started to make arrangements, planning to give priority to New York farms as hemp suppliers for its extraction and formulation activities within the park.
Canopy intends to work with third-party organizations, businesses and researchers focused on multiple applications of the hemp crop including fibers, seeds and hemp-derived cannabinoids. Hemp can be used to create a wide range of products. This includes oils, lotions, food for humans and animals, environmentally-friendly clothing, paper, biodegradable plastic and fuel.
Local government and economic development officials, the New York Farm Bureau, state representatives, Governor Andrew Cuomo’s office and Senator Chuck Schumer have expressed support for the hemp hub, as an economic driver for the region. Since announcing its plans in January 2019, the company has also been working closely with US governmental officials.
A Paul Hastings legal team led by partner Gerd Alexander and including partner Samuel Waxman and associates AJ Warner and Brooke Schachner represented Canopy in the recent deal, which is expected to close on June 1. The Paul Hastings lawyers also represented Canopy in their acquisition of New York-based Acreage Holdings, in the first major cross-border cannabis merger. In the Felchar facilities deal, Loeb & Loeb partner Richard Nardi and associate Marley Strauss represented the seller.