Delta 9 Receives Approval from Health Canada for Expansion to Processing Area

WINNIPEG, Manitoba, April 13, 2020 (GLOBE NEWSWIRE) -- DELTA 9 CANNABIS INC. (TSX: DN) (OTCQX: VRNDF) (“Delta 9” or the “Company”), is pleased to announce it has received Health Canada approval for its new purpose-built cannabis processing center which will allow for fully automated bottling, packaging, capping and labelling of its consumer-packaged dried cannabis products. The Company anticipates that once the processing center is operating at capacity it will allow for processing of up to 25,000 kg/year of dried cannabis flower material.

“We have increased our licensed cannabis cultivation output significantly over the past two years to our current 8,325 kg/year capacity. This approval will allow us to streamline and automate our packaging and labelling activities and improve our ability to bring consumer packaged cannabis products to market more quickly,” said John Arbuthnot, CEO of Delta 9. “The excess capacity in the new production line will also allow us to source premium cannabis flower from other licensed producers, including the Company’s micro-cultivation partners, for sale through our wholesale and retail distribution network.”

Phase II Expansion

The Company is now working to expand its Health Canada licensed cannabis production perimeter to include additional buildings at its licensed production facility in Winnipeg, Manitoba (the “Delta Facility”) which will bring the total licensed square footage to approximately 135,000 square feet, from 80,000 square feet currently licensed by Health Canada. The Company anticipates there will be no cost to this licensed area expansion.

The Company also wishes to announce that in light of the COVID-19 pandemic, it is has paused its previously announced expansion plans and capital deployment for the remaining Phase II areas of the Delta Facility. The expansion will continue once the Company has greater certainty regarding the capital markets, macro economic conditions and global health conditions.

“In light of the current health crisis and capital markets environment we are taking a more conservative approach to capital deployment,” said John Arbuthnot, CEO of Delta 9. “Our goal is to ensure that our current licensed production assets are operating at design capacity and we achieve efficient sell through rates while continuing with our organic expansion strategy.”

The Company anticipates it will ultimately have up to 420 of its grow pod cultivation systems (“Grow Pods”) under license as a part of its Phase II expansion that would potentially increase the overall capacity by 3,650 kg/year with overall production capacity for the Delta Facility at 11,975 kg/year. The additional Grow Pods will be placed within existing warehouse space at the Delta Facility and the capital expenditure of approximately $7,000,000 would be funded from operations and cash on hand.