The deal with Canopy Growth SMITH FALLS, ON and TORONTO, Dec. 3, 2018 /CNW/ - Canopy Growth Corporation ("Canopy Growth") (TSX: WEED) (NYSE: CGC) announced today that it has entered into two agreements with 48North Cannabis Corp. ("48North") (TSXV: NRTH) a strategic investment financing ("Financing Agreement") and partnership and a supply agreement ("Supply Agreement").
Under the Supply Agreement, 48North will supply Canopy Growth with dried cannabis produced from high-grade, unique genetics, grown at 48North's wholly-owned facility, DelShen Therapeutics Corp. ("DelShen"). The total volume of the Supply Agreement is estimated to be a minimum of 1,200 kilograms and deliverable over the course of 12 months. The first 100-kilogram transfer under the Supply Agreement is expected to ship from 48North's DelShen facility to Canopy Growth by December 5, 2018.
Under the Financing Agreement, Canopy will invest $3 million into 48North and receive 4,000,000 Common Units ("Units") at $0.75 per Unit. 48North will issue each Unit at $0.75 to Canopy Growth for $3 million, representing approximately 3.4% of the issued and outstanding shares. Each Unit will be comprised of one Common Share and one quarter Common Share Purchase Warrant (each whole Common Share Purchase Warrant, a "Warrant"). Each full Warrant will entitle the holder to acquire an additional Common Share of 48North for a period of 12 months from the date of issue at a strike price of $1.15, provided that, the expiry of the warrants can be accelerated if the closing price of 48North's common shares on the TSX Venture Exchange ("TSXV") is at least $1.50 for a minimum of 10 consecutive trading days and a notice of acceleration is provided, in accordance with the terms of the warrant, to a date 30 days after the date of the notice.
The Supply Agreement further states that Canopy Growth will work with 48North on a non-binding but best-effort basis to establish a national retail presence for its products in Tokyo Smoke and Tweed stores.
"The strategic partnership between 48North and Canopy Growth, a world-leading cannabis company, is a testament to the quality, diversity and consistency of our production, as well as the strength of our branding and product development," said Alison Gordon, Chief Executive Officer of 48North. "The $3 million equity financing completes our $10 million private placement and will help us build out our next generation of cannabis products. The Supply Agreement provides significant near-term revenue, along with future retail distribution options for 48North's branded cannabis, cannabis-accessories and next-generation products."
"Through CraftGrow and Canopy Rivers we've always sought supplemental sources of supply in order to offer customers a diverse range of products," said Mark Zekulin, President & Co-CEO, Canopy Growth. "By adding 48North to the broader repertoire we'll strengthen our ability to bring exciting cannabis products to market. By acquiring a stake in 48North we recognize the strength of their management team and their ability to successfully launch into the Canadian cannabis market."
Here's to Future Growth.