(Bloomberg) -- A former Novartis AG facility that churned out billions of pills for the pharmaceutical giant is transitioning to a new product: cannabis.
Mile High Labs, a Colorado startup that calls itself the world’s largest manufacturer of CBD, purchased the plant in Broomfield, Colorado, for about $18.8 million.
It’s the latest bet that demand for the compound, found in hemp and marijuana, will continue to surge in the U.S. CBD is at the center of the latest wellness craze, drawing increased attention since it was decriminalized at the federal level late last year. Kroger Co. and CVS Health Corp. have started to stock some CBD products, while other large public companies are waiting for more regulatory clarity before jumping on the trend.
The industry could be worth $22 billion by 2022, according to research firm Brightfield Group, and investors are preparing for major retailers and large consumer companies to get involved.
“This gives us a building that can produce high-quality products that meet the standards for the likes of Walmart and Coca-Cola -- whoever is interested,” said Jon Hilley, Mile High’s chief financial officer.
Mile High, which has raised more than $100 million in funding, including a $65 million credit facility, estimates that it produces as much as 33% of the CBD extract in the world. The company has been boosting its production capacity and will use the roughly 400,000 square-foot Novartis plant, which includes millions of dollars worth of equipment, to make private-label CBD products, including tinctures, lotions and gummies.
CBD is the non-intoxicating cousin of marijuana’s high-inducing THC compound. Mile High has developed mobile extraction facilities that can process 50 acres of hemp per day.
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