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Why Shares of Village Farms International Were Rocketing Higher on Tuesday

By Eric Volkman – Updated May 26, 2020 at 3:07PM

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The company is a partner in a joint venture that was just awarded a crucial license by the Canadian government.

What happened

Village Farms International (VFF 2.04%) and its partner Emerald Health Therapeutics (EMHT.F 18.25%) announced Tuesday that their Pure Sunfarms joint venture received a sales license for a greenhouse located in British Columbia.

They also revealed that Pure Sunfarms will start producing its first line of so-called "Cannabis 2.0" derivative products this summer.

Marijuana in a corporate grow space

Image source: Getty Images.

So what

Both Village Farms (which holds the majority in the joint venture) and Emerald will benefit from Pure Sunfarms' new license.

Derivatives are a promising and still relatively new product segment in the Canadian market, as they were made legal only last year and are just now reaching store shelves. Village Farms, Emerald, and Pure Sunfarms won't be first in the segment, but by the same token they won't lag behind too badly.

The plan is to start with vaping products. The Pure Sunfarms name will grace sets of vape cartridges, the contents of which will be based on the brand's existing strains of dried flower currently on dispensary shelves. Additionally, Village Farms says, Pure Sunfarms will start producing a line of bottled cannabis oils.

Now what

Village Farms has bigger plans for Pure Sunfarms once the latter's Cannabis 2.0 products hit stores. This is "just one of a number of near-term catalysts for Pure Sunfarms that we believe will continue to drive Pure Sunfarms' sales and profitability growth," it wrote.

Village Farms believes full legalization of recreational cannabis in the U.S. should happen soon, which would help drive the company's sales considerably.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Emerald Health Therapeutics, Inc. Stock Quote
Emerald Health Therapeutics, Inc.
EMHT.F
$0.03 (18.25%) $0.01
Village Farms International, Inc. Stock Quote
Village Farms International, Inc.
VFF
$2.00 (2.04%) $0.04

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