Executes 60 Million US Dollar (74M CAD) Supply Agreement Bogota, Colombia--(Newsfile Corp. - October 20, 2021) - Medcolcanna Organics Inc. (NEO: MCCN) ("Medcolcanna", "MCCN" or the "Company"), a leading Canadian and globally integrated medicinal cannabis company with operations in Colombia, is pleased to announce the signing and execution of a 5-year deal with Industrial Hemp Farms ("IHF"), one of the largest producers of hemp derived products in the world. This $12 Million USD ($14.9M CAD) a year deal ($60 M USD in total - $74.4M CAD over five years) follows the Colombian government's change in regulation this past July which allows Colombian licensed producers to export dried flower outside of the country.
The terms in the definitive supply agreement revolve around a "take or pay" arrangement for the supply of CBD dried flower. The agreement also outlines the sale and distribution of other cannabis derived products such as isolates, distillates, and an investment option for IHF into MCCN if IHF meets certain performance targets. Details of the agreement are as follows:
- MCCN will be shipping approx. 20,000 pounds of CBD dried flower per month which adds up to $1 M USD ($1,24 M CAD) of CBD dried flower.
- The agreement establishes a long-term supply partnership, with the contract having a five-year term.
- The agreement comes with an exclusivity arrangement whereby IHF will be the only distributer in the US for Medcolcanna products and Medcolcanna its sole supplier from Colombia.
- The agreement establishes a minimum supply quantity through a "take or pay" arrangement for the supply of 100,000 pounds of CBD dried flower every six months.
- Additional to the supply agreement, the two companies have established an option agreement whereby MCCN is to produce and supply other products for IHF including CBD, CBG and CBN isolates, oils and distillates, as well as end use consumer products.