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HIGHLIGHTS
  1. Health Canada gives B.C. pot farm an outdoor cultivation licence;
  2. Cannabis farms need to be planted by early June, but nearly 200 applicants still await approval;
  3. 48North signs Alberta supply agreement for outdoor-grown cannabis ahead of receiving licence

A cannabis grower in British Columbia has been granted what is likely Canada’s first outdoor cultivation licence, while nearly 200 others await federal approval to plant lower-costing and energy-efficient pot farms as the short window for spring planting nears.

Cannabis grower Good Buds on Salt Spring Island said it received a licence from Health Canada on May 10, which the company believes is the first outdoor cultivation permit so far in the country.

A Health Canada spokesperson told Cannabis Professional that a Canadian pot producer was granted an outdoor licence on May 9, but declined to say if this is the same licence that was granted to Good Buds.

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The government stated earlier this year that it received 195 applications for outdoor licences. Crops need to be planted roughly by the first week of June in order to be harvested by October in order to evade frost, which would damage the plants.

On Wednesday, 48North Cannabis Corp. said it signed a supply agreement with Alberta’s sole recreational pot wholesaler to supply 2,460 kilograms of dried marijuana from its outdoor farm in Ontario in 2019, as well as other products from two indoor facilities. This follows a similar supply agreement in Quebec to supply 1,200 kg from the farm. While 48North received its Confirmation of Readiness status from Health Canada for its outdoor licence, it had not yet received its licence. The outdoor farm is expected to harvest around 40,000 kg of organic cannabis from 3.7 million square feet.

While an outdoor cannabis farm in Canada will produce just one crop per year due to the country’s short growing season, versus roughly three indoor harvests annually, the sharply lower cost of production makes this traditional farming route attractive to many companies. Some producers have estimated cost of production at 25 cents per gram or less of packaged product. This is less than a quarter the cost of indoor production, according to estimates, though this figure varies widely among growers.

Most of Canada’s outdoor production is expected to be sold into the extraction market, which requires lower quality product than what is grown indoors where the environment – and to a large extent the final plant quality – is controlled.

Of the large licensed producers, CannTrust Holdings has been the most vocal about its outdoor strategy. In April, the company acquired 81 acres in B.C. for outdoor growing, and has a letter of intent to acquire 120 more acres. The site has yet to be licensed, but CannTrust is targeting a whopping 75,000 kg of outdoor production this year with plans to raise this to 100,000 kg to 200,000 kg by 2020.

“We’ve fenced the properties, we’ve implemented all required security measures, we’ve moved and hired staff locally, and we’re currently working on irrigation and preparing the site. We’ve also submitted our complete applications to Health Canada and are awaiting their approval,” said CannTrust chief executive Peter Aceto on this week’s earnings call with analysts.

The outdoor strategy is key to improving CannTrust’s margins, Mr. Aceto said: “Today our cost of harvest is between 70 cents and 75 cents to the point of harvest. Whereas for outdoor we estimate that the cost is going to be roughly 15 cents. So just by virtue of that cost improvement, we're going to see margin improvement going forward, mostly starting in early 2020 as we start to sell through the product that we create through extraction.”

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Below are some answers to frequently asked questions on outdoor cannabis growing, which has never before been done in Canada outside of the black market, which typically operates on a smaller scale.

How will outdoor cannabis farms be planted?

Most pot farms are expected to plant clones using machinery designed for commercial vegetable crops, though some could plant by hand. Many farms will have on-site nurseries where clones will be grown, said Harvey Gracey, cultivation consultant for Cannabis Consultants Inc.

Though the origins of cannabis is outdoor growth in many regions around the world, seed genetics are not yet deemed stable at the commercial level.

How will outdoor cannabis farms, some of which will encompass many acres, be harvested?

While food crops are harvested with large and expensive combines, outdoor cannabis farms are expected to be largely reaped by hand as farm machinery has not yet been custom made for the delicate crop. While some companies will cut the plant at the ground level and then process them in an indoor facility, others will opt to cut off branches only and mulch the stalks, Mr. Gracey said.

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Most are expected to put the branches through bucking machines that will strip off the buds that will then be dried. Drying facilities are typically being built on the farm properties, as are secure storage and packaging areas.

While the drying process will be largely the same as at indoor facilities, the areas will need to be bigger due to the increased volume that will come from each farm’s harvest during a short time in the fall. Product destined for extraction, however, will not need to be trimmed.

How many harvests will each outdoor cannabis farm produce?

Only one annual harvest is expected per outdoor crop, said Mr. Gracey, adding that it will needed to be planted by the first week of June. Though some strains require only six weeks to flower, most require 12 weeks. A crop that is planted too late could be damaged by frost if still in the ground after the Canadian Thanksgiving in early October.

How will pot farmers deal with outside critters?

While indoor crops face potential insect infestations, outdoor growing comes with this threat as well as natural predators that need to be fended off. Some farmers may opt to plant so-called cover crops, which are plants that attract beneficial insects that will feed on detrimental pests such as spider mites and aphids.

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Airborne dust is also a threat as this can carry unknown elements and contribute to the likelihood of outdoor crops being sold for extraction due to potentially lowered quality.

And just like indoor outfits that require tall fences around property perimeters, larger outdoor farms must also be fenced off. While this is a much larger cost for outdoor growers due to the bigger property size required, it does keep the deer out. It does not, however, prevent grazers like rabbits from digging under fences and nibbling on their crops.

How many plants can be planted per acre outside and will farms be irrigated?

This can range anywhere from 700 cannabis plants per acre to 2,500, depending on the different strains and growing methods, said Mr. Gracey, estimating that 1,200 to 1,500 plants per acre could be the average.

Most outdoor pot farms will be irrigated to ensure the crop grows. While too much rain could cause root problems, dry conditions will be mitigated by irrigation systems similar to those in greenhouses. The drip irrigation systems are expected to also transport nutrients to the plants.

What kind of security measures must be taken?

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Security measures to keep out and identify intruders are the same for outdoor pot farms. The difference is the large size of the farm that requires more fencing and security cameras.

“The whole idea of being able to get power to cameras around a fence line for an outside grow type scenario, to intrusion detection, it’s a different story to do that outside than inside,” said David Hyde, president of security advisory firm 3 Sixty Secure Corp.

“You’ve got to work a lot harder to stretch the power out. The infrastructure required is more challenging. There’s just more rigmarole to that environment. It’s more specialized design required and it’s going to take more effort and cost more money.”

- With files from Mark Rendell

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