Cronos Group and MediPharm Labs Enter Cannabis Concentrate Supply Agreement
14 Mai 2019 - 1:00PM
Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“
Cronos
Group” or the “
Company”), is pleased to
announce that it has entered into a multi-year supply agreement
with MediPharm Labs Corp. (TSXV: LABS) (OTCQX: MEDIF)
(“
MediPharm Labs”). MediPharm Labs will supply
Cronos Group with approximately $30 million of high-quality private
label cannabis concentrate over 18-months, and, subject to certain
renewal and purchase options, potentially up to $60 million over
24-months. In addition, Cronos Group and MediPharm Labs have
entered into a multi-year tolling agreement, where Cronos Group
will supply bulk cannabis to MediPharm Labs’ state of the art
extraction facility in Barrie, Ontario, to fulfill certain
additional processing needs of the Company.
“As the industry develops and matures, we see
opportunity to work with companies like MediPharm Labs that provide
specialized, high-quality services and inputs for our products,”
said Mike Gorenstein, CEO of Cronos Group. “Along with our internal
capabilities, we are pleased to be working with MediPharm Labs to
bring great products to consumers in anticipation of the derivative
market launching in Canada this fall.”
“With the continued evolution of the Canadian
cannabis industry, we are excited to partner with Cronos Group in
their journey to launch new products and secure MediPharm Labs’
high-quality private label supply of concentrates,” said Patrick
McCutcheon, CEO, MediPharm Labs. “We look forward to supporting the
team at Cronos Group with our specialized extraction capabilities
and expertise to address a rapidly expanding cannabis market and
growing consumer demand.”
Bulk Resin Supply Agreement
Under the terms of the Bulk Resin Supply
Agreement (the “Agreement”), Peace Naturals
Project Inc. (“Peace Naturals”), a wholly-owned
subsidiary of Cronos Group, will purchase a minimum of
approximately $30 million of cannabis concentrate from MediPharm
Labs Inc. (“MediPharm”), a wholly-owned subsidiary
of MediPharm Labs, over the course of 18-months. Peace Naturals
will also have a right of first offer to purchase an additional
approximately $18 million of cannabis concentrate over the same
period, subject to the availability of such supply from MediPharm.
The Agreement includes an option for a mutual extension where, if
extended, Peace Naturals would additionally purchase a minimum of
approximately $6 million over 6 months, and would have a right of
first offer to purchase an additional approximately $6 million over
the same period, subject to the availability of such supply from
MediPharm, bringing the total potential aggregate value of the
Agreement to over $60 million to the end of April, 2021.
Cannabis Concentrate Program
Agreement
Under the terms of the Cannabis Concentrate
Program Agreement (the “Tolling Agreement”), Peace
Naturals will supply bulk quantities of dried cannabis to MediPharm
for processing on a fee for service basis into bulk resin or other
premium cannabis oil derivative products. The Tolling Agreement has
a two-year term.
About Cronos Group Inc.Cronos
Group is an innovative global cannabinoid company with
international production and distribution across five
continents. Cronos Group is committed to building disruptive
intellectual property by advancing cannabis
research, technology and product development. With a
passion to responsibly elevate the consumer experience, Cronos
Group is building an iconic brand portfolio. Cronos Group’s
portfolio includes PEACE NATURALS™, a global health and
wellness platform, and two adult-use brands COVE™ and
Spinach™. To learn more about Cronos Group and its brands,
please visit: www.thecronosgroup.com; www.peacenaturals.com;
www.covecannabis.ca; www.spinachcannabis.com.
About MediPharm Labs
Corp.Founded in 2015, MediPharm Labs has the distinction
of being the first company in Canada to become a licensed producer
for cannabis oil production under the ACMPR without first receiving
a cannabis cultivation licence. This expert focus on cannabis
concentrates from being built to cGMP (current Good Manufacturing
Practices) and ISO standard-built clean rooms and critical
environments laboratory, allows MediPharm Labs to produce purified,
pharmaceutical-like cannabis oil and concentrates for advanced
derivative products. MediPharm Labs has invested in an expert,
research-driven team, state-of-the-art technology, downstream
extraction methodologies and purpose-built facilities to deliver
pure, safe and precisely-dosed cannabis products to patients and
consumers. MediPharm Labs’ private label program is a high margin
business for the Company, whereby it opportunistically procures dry
cannabis flower and trim from its numerous product supply partners,
to produce cannabis oil concentrate products for resale globally on
a private label basis.Through its subsidiary, MediPharm Labs
Australia Pty. Ltd., MediPharm Labs has also completed its
application process with the federal Office of Drug Control to
extract and import medical cannabis products in Australia.
Forward-looking statementsThis
news release contains “forward-looking information” and
“forward-looking statements” within the meaning of applicable
Canadian and U.S. securities laws. All information contained herein
that is not clearly historical in nature may constitute
forward-looking information. In some cases, forward-looking
statements can be identified by words or phrases such as “may”,
“will”, “expect”, “plan”, “anticipate”, “intend”, “potential”,
“estimate”, “believe” or the negative of these terms, or other
similar expressions intended to identify forward-looking
statements. Some of the forward-looking statements contained in
this press release include the purchase by the Company of certain
quantities of cannabis resin and other premium cannabis oil
derivative products, the Company’s supply of certain bulk
quantities of dried cannabis for processing on a fee for service
basis, the Company’s intention to build an international iconic
brand portfolio and develop disruptive intellectual property.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
management, are inherently subject to significant business,
economic and competitive risks, uncertainties and contingencies
that may cause actual financial results, performance or
achievements to be materially different from the estimated future
results, performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are
not guarantees of future performance. A discussion of some of the
material risks applicable to the Company can be found in the
Company’s current Management’s Discussion and Analysis and Annual
Information Form, both of which have been filed on SEDAR and EDGAR
and can be accessed at www.sedar.com and www.sec.gov/edgar,
respectively. The forward-looking information included in this news
release is made as of the date of this news release and, except as
required by law, Cronos Group disclaims any obligation to update or
revise any forward-looking statements. Readers are cautioned not to
put undue reliance on these forward-looking statements.
For further information please
contact:Anna Shlimak Investor Relations Tel: (416)
504-0004 investor.relations@thecronosgroup.com
MediPharm Labs (TSXV:LABS)
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