Big-time cannabis production coming to former Nestlé factory in Chesterville

Above: Up to 300,000 of the former Nestlé’s plant’s 373,000 square feet in Chesterville could ultimately go into marijuana production, under the deal inked between the IDP Group and Cannabis Wheaton Income Corp. of B.C.

VANCOUVER, British Columbia (GLOBE NEWSWIRE) — Cannabis Wheaton Income Corp. (d/b/a Wheaton Income) (TSX.V:CBW) (“Wheaton Income” or “Wheaton” or the “Company“) is pleased to announce that it has entered into a binding strategic alliance and streaming agreement (the “Agreement”) with IDP Group Inc. and HMT Solutions Inc. (collectively “IDP“) whereby IDP, via a newly formed subsidiary (“CannabisCo”), will become a significant streaming partner to the Company, and the newest participant in the Wheaton Licensing Program.

IDP plans to operate out of their large-scale, wholly-owned former Nestle® Canada plant in Chesterville, Ontario (the “Facility”) that rests on 60 acres of land and hosts an existing 373,000 square feet of building space. The Facility is ideally situated approximately 50 minutes southeast of Ottawa, Ontario in close to proximity to railway and highway access.

IDP brings a seasoned management team with decades of project development experience including indoor agriculture, building design, lighting, HVAC systems, construction and project management and have successfully executed over $1 billion worth of industrial development projects to date. IDP also brings proprietary indoor vertical cultivation methodologies and technologies (which include modular farming and in-house LED lighting) (the “Cultivation Technology”) that they intend to deploy at the Facility which is estimated to increase functional cultivation space by over 200% once fully implemented.

Pursuant to the Agreement, the Company will provide IDP with $12,000,000 in funding related to the initial costs for the Phase I construction of the Facility, currently estimated to be 100,000 square feet of cultivation space and upon successful initial implementation of the Cultivation Technology is expected to yield up to 200,000 square feet of effective cultivation space. The Company also has the option to fund an additional two 100,000 square foot expansion phases (the “Expansion Phases”) of the Facility that, upon completion, will increase the overall Facility cultivation footprint to 300,000 square feet.

The Expansion Phases are subject to the Company completing satisfactory due diligence and the parties mutually agreeing to a construction budget and timeline. In addition, the Company will assist CannabisCo in obtaining its ACMPR licensing (“License”) through its Wheaton Licensing Program by providing CannabisCo with all of the resources and expertise necessary to achieve the License.

As consideration for its licensing efforts and funding commitment, the Company will receive a minority equity interest in CannabisCo and a perpetual stream of 30% of all cannabis (or cannabis-derived products including any cannabis trim) produced at the Facility. The Company estimates that its cannabis stream from Phase I of the Facility will result in approximately 7,500,000 grams of cannabis per annum with a further potential to increase the stream’s output using the Cultivation Technology. The Company will also assist in commercializing the intellectual property related to the Cultivation Technology.

Chuck Rifici, Chairman and Chief Executive Officer of Wheaton Income, stated, “The partnership with IDP is a fantastic addition to the Cannabis Wheaton platform as Hamed and the team bring years of complementary skills and technology to this project. We also look forward to implementing their proprietary vertical cultivation system and custom-made fabricated LED lighting systems that we believe can set new standards for yields per square foot and operating cash costs per gram for indoor cultivation. We believe this to be an exciting and an accretive deal for both parties.”

Hamed Asl, Partner at IDP Group, commented, “We are excited to partner with Chuck and the industry leading Wheaton team on this transformational project for our community. When Nestle left Chesterville 12 years ago, the city lost nearly 300 jobs and we aim to bringing back economic activity to the region. This project is a tremendous opportunity for all stakeholders involved while also providing exposure for our modular farming system and other proprietary technologies, which we believe have the potential to enhance the value of Wheaton and its streaming partners.”

The transaction remains subject to certain conditions precedent including receipt of applicable regulatory approvals and the execution of a definitive agreement which the parties expect to occur within 60 days.

Flashback, above: The IDP Group’s Hamed Asl  tells a September 2017 gathering at the 171 Main Street North factory that his company was on the cusp of an arrangement — which he wasn’t quite ready to disclose — that would see the place employing up to 200 people in the next couple of years. “If we weren’t working with lawyers right now, I would tell you right now. I kind of want to,” he teased the crowd of more than 125  at the annual North Dundas Township and North Dundas Chamber of Commerce wine and cheese schmoozer. “We are hopefully, if everything lines up, in the next two years, we’re looking to possibly create 150 to 200 jobs here in Chesterville.” 
Specializing in modular office interiors and furniture, warehousing logistics and project management, Asl reported that IDP fully moved all of its operations into the former Nestlé factory as of June 2017. Formerly based in Ottawa, the firm then employed 10 people at the Chesterville site and was looking to hire five more. Closed by Nestlé in 2006, the IDP Group bought the vacant plant in November 2015 rather than pursue the construction of a new warehouse in Ottawa.
Also under IDP’s ownership, excess space at the 373,000-square-foot factory was rented by PCL Construction to build the roof and sprinkler system of the revamped National Arts Centre in 2016. The site also served as a staging area for an electrical contractor involved in a large project on the provincial hydro grid earlier in the year. And the cavernous facility has also hosted a number of movie and video shoots — with Mayor Duncan jokingly describing the village’s new status as “Chester-Vegas” at the time.

The video above features the story of “Beleave” — another marijuana grower supplying a stream of product to Cannabis Wheaton Income Corp. A newly formed subsidiary of IDP Group Inc., owner of the former Nestlé plant in Chesterville, has inked a similar deal to send the output of up to 300,000 square feet of cultivated cannabis to the Vancouver-based corporation as well.

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