The cannabis cultivation and manufacturing facility now under construction in South Buffalo will be capable of growing more than $19 million worth of recreational pot – enough for more than 5 million joints or 20 million gummies each year, according to the head of the company that will operate it.
That will make the new campus a critical part of the company's overall expansion plan as it seeks to become a leading supplier in the burgeoning adult-use marketplace.
Toronto-based RIV Capital and its new U.S. subsidiary, Etain LLC, will be the primary occupants of the cannabis campus that California-based Zephyr Partners is building in the Buffalo Lakeside Commerce Park.
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They will start with a 68,000-square-foot main building for their own use and a 7,500-square-foot secondary facility to house four smaller independent licensees that Etain will support under the state's social-equity initiative.
That’s enough space to enable production of 12,000 pounds of cannabis annually.
But that's just the first part of what could be replicated in the future, as RIV and Etain pursue a second and potentially even third phase of development on 72.4 acres of open land, based on how the New York market develops and the demand for cannabis.
"Buffalo is a huge part of building out our cultivation footprint," said Mark Sims, CEO of RIV, an investment firm that just completed the second step of its acquisition of Etain, a state-licensed cultivation and production firm that is already engaged in the medical marijuana market and plans to expand into the recreational market. "The Buffalo facility will be one of the best indoor cultivation facilities in New York, if not the country."
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RIV – which is owned by Scotts Miracle-Gro Co. – paid $48.4 million in cash and stock to buy Etain, a women-owned company based in Westchester County, north of New York City.
The Canadian company bought the nonregulated business of Etain in April. But RIV had to wait until now for state approval to buy the regulated portion of the 7-year-old company, which is one of the state's five original medical cannabis licensees and one of 10 approved cannabis operators for the adult-use program. Acquiring the license, following a recommendation from the Office of Cannabis Management, allows RIV to move forward with its larger plan.
However, the timing for that is still not clear. The Office of Cannabis Management has not finalized regulations that will govern the fledgling industry in New York, so there's no definitive date when companies can start making and selling cannabis products for adult use.
And Sims voiced frustration with some elements of the draft regulations – especially a three-year delay for existing medical suppliers like Etain to enter the retail business. That delay is intended to give smaller operators a head start on establishing a foothold in the new market.
"All these retailers are going to need products to put on their shelves," he said. "It’s our desire to be that supplier for product."
Etain already operates a 14,000-square-foot cultivation and manufacturing facility in Chestertown, as well as four medical retail dispensaries in Manhattan, Yonkers, Kingston and Syracuse.
It's tripling the size of the Chestertown site – essentially a hybrid of indoor and greenhouse operation – to 43,000 square feet by the second quarter of 2023, Sims said.
However, he said, Etain really wants more of a "high-end premium indoor facility," where it can produce "really premium cannabis flower."
"That's what we're going to do on the south side of Buffalo," said Sims, a former Scotts executive who moved over to RIV when it was acquired by the publicly traded U.S. company.