PLANS for a $130 million medical cannabis growing facility at Mildura have been put on hold.
The Cann Group announced in March this year its intention to build a 34,000-square metre facility, capable of cultivating and producing 70,000kg a year for domestic and export markets.
It said the facility, Australia’s largest growing site in the region, would create 170 jobs and generate annual revenues between $160 million and $200 million based on the then wholesale price of cannabis.
However, the group said on Friday it had been forced to make a detailed review of the Mildura project due to uncertainty in the global medicinal cannabis industry.
Cann Group chairman Allan McCallum said recent industry developments and changes to the scheduling of the new Mildura facility had contributed to a substantial weakening of the company’s share price.
“This is clearly very disappointing and we are working hard to be in a position to provide some further detail around those plans and the associated funding implications,” Mr McCallum said.
“It is critically important that we adjust our expansion plans so that the investment we make in new capacity is aligned with our assessment of when that capacity can be profitably sold into both the domestic and global markets,” he said.
“We are therefore undertaking a detailed review of the Mildura project with an objective to stage its construction and progressively increase production capacity over time.”
Mr McCallum said that given the engineering and design complexities of the project, the review would take some time.
“The review process will also take account of the costs of pursuing various options so as to ensure the responsible and prudent investment of shareholders’ funds, and an appropriate and timely return on that investment,” he said.
“We want to be in a position to clarify the revised construction schedule for Mildura and associated funding requirements as quickly as possible, but it is important that we do the analysis necessary to arrive at the best option.”
Mr McCallum said that irrespective of the temporary suspension of works at Mildura and associated expenditure, the facility would be state-of-the-art and would generate strategic value for Cann Group over the long term.
Cann Group chief executive Peter Crock said that as the group continued to assess the most appropriate construction schedule for the new facilities at Mildura, he was confident of the long-term strategic value of the project.
“As we work towards a revised plan for the Mildura facility, I want to reinforce the importance of proceedings with this project,” he said.
“This facility delivers a capability to produce medicinal cannabis, utilising the latest in design and cultivation technology.
“Pending the outcome of our review, and subject to having an appropriate funding package and necessary approvals in place, our preliminary target is to develop an initial stage with up to 25,000kg in capacity, with commissioning to start by the end of next year.”
Mr Crock said the company had already spent $47 million at the site, including repurposing original buildings and erection of the glasshouse structure.
