A Canadian company, Village Farms International Inc., has announced that it has started building its first indoor cannabis production facility in the Netherlands. The company is the parent company of Pure Sunfarms, a leading cannabis producer and brand in Canada. The new facility will be operated by Leli Holland, a subsidiary of Village Farms that received approval from the Dutch government to participate in a new program that aims to regulate the cannabis supply chain for coffee shops in the country.
The Dutch Program
The Dutch Program is an experiment that was launched by the Dutch government in 2022 to explore the possibility of a “closed cannabis chain” for cannabis coffee shops in several cities across the country. The program allows a limited number of licensed producers to grow and supply cannabis to designated coffee shops, where adults can buy and consume small amounts of cannabis legally. The goal of the program is to improve the quality and safety of the cannabis products, as well as to reduce the involvement of the illicit market and the associated crime and violence.
The program is expected to run for four years, with a possible extension of another year and a half. The program will be evaluated by an independent research team, which will monitor the effects of the program on public health, safety, and social aspects. The results of the evaluation will inform the future policy decisions on cannabis regulation in the Netherlands.
Leli Holland’s plans
Leli Holland is one of the 10 companies that were selected by the Dutch government to participate in the program. The company is majority-owned (85%) by Village Farms, which acquired it in September 2021. Leli Holland plans to produce cannabis in an existing building in an industrial district in Drachten, a village in the municipality of Smallingerland. The company received a permit from the municipality to begin retrofitting the location for cannabis production.
Leli Holland intends to start production in the fourth quarter of 2024 and expects to sell flower and hash products across consumer-preferred formats, including pre-rolls. The company will target the Dutch market, as well as other European markets where cannabis is legal or tolerated. Leli Holland will leverage the expertise and experience of Village Farms and Pure Sunfarms, which have been operating in the Canadian cannabis market since 2017.
Village Farms’ vision
Village Farms is a vertically integrated greenhouse grower that produces and distributes fresh produce, such as tomatoes, cucumbers, and peppers, in North America. The company also operates in the cannabis sector through its wholly owned subsidiary, Pure Sunfarms, which is one of the largest and most profitable cannabis producers and brands in Canada. Pure Sunfarms has a cultivation capacity of 1.65 million square feet at a single location in Delta, British Columbia, and plans to further increase it to 2.2 million square feet by 2022.
Village Farms sees the Netherlands as a strategic opportunity to expand its cannabis business internationally. The company believes that the Netherlands is a limited license market with a long-established consumer base and a cannabis-friendly regulatory environment. The company also expects that the Dutch Program will pave the way for the legalization of recreational cannabis in the country, as well as in other European countries.
“As a leading, profitable cannabis business in Canada, we are thrilled to build on our rich history in the Netherlands to enter this first major European recreational market,” said Michael DeGiglio, President and Chief Executive Officer of Village Farms. “Our two-phased approach to ramping up production enables us to enter the market in a timely and capital efficient manner in line with the roll out of the Dutch Program. We look forward to contributing to the success of the program and to serving the Dutch consumers with high-quality cannabis products at an everyday price.”
