North American greenhouse operator Village Farms International Inc (NASDAQ: VFF) announced an agreement Friday with Nature Crisp to launch a joint venture focusing on outdoor cultivation of hemp and extraction of CBD with a presence in several states.
What Happened
Village Farms International and Nature Crisp LLC — a Georgia-based farming operation that's part of the Jennings agricultural group of companies — will create a joint venture, Village Fields Hemp, that will be 65-percent owned by Village Farms and 35-percent owned by Nature Crisp.
Through the joint venture, Village Farms and Nature Crisp will be entering the hemp and hemp-derived CBD market. Both companies are currently focused on growing produce in Canada and the U.S.
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Under the terms of the JV agreement, Village Farms will invest around $15 million in Village Fields Hemp for startup costs and working capital.
Aside from outdoor hemp cultivation plans, Village Farms is also looking into greenhouse hemp growing in Texas and is keeping an eye on the developments regarding the legalization of commercial cultivation of hemp and hemp-derived CBD products.
In Texas, Village Farms owns and operates 5.7 million square feet of greenhouse facilities. If the company converts the greenhouses in Texas to hemp production, it would be the largest greenhouse hemp production facility in North America.
Why It's Important
Entering the hemp and hemp-derived CBD market presents a major opportunity for Village Farms given the estimates for the market's growth in the next four to five years. New Frontier Data projects the hemp CBD market alone will reach $1.3 billion by 2022.
What's Next
The capital investment for extraction capabilities will be determined later based on the locations of hemp productions and extraction operations, according to the companies.
Village Fields said it's determining the locations where it will initially establish operations. The company plans to start field cultivation in spring, with between 500 and 1,000 acres in production this year.
By the end of the year, the joint venture plans to start supplying CBD oil on a wholesale basis. The JV is slated to begin manufacturing branded CBD products in 2020.
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