GLG Enters CBD Market; Signs Acquisition Deal with Leading Chinese CBD Partner
Vancouver, British Columbia (FSCwire) - GLG Life Tech Corporation (TSX: GLG) (“GLG” or the “Company”), a global leader in the agricultural and commercial development of high-quality zero-calorie natural sweeteners, is pleased to announce today that it plans to enter the international cannabis market, with a primary focus on high-purity cannabidiol (CBD) products for sale into the international marketplace. The Company has entered into a strategic framework agreement to acquire the majority ownership of a leading Chinese hemp cultivator and producer of high-purity CBD oils and products.
GLG’s decision to enter the cannabis space and particularly the CBD (cannabidiol) space aligns well with the Company’s historical business focus, industry-leading expertise, and core competencies. Like stevia, the cannabis industry is fundamentally an agricultural industry, one in which a company’s success often hinges on its ability to develop superior plant varietals and growing techniques, as well as the ability to economically isolate and highly purify the key components within the plant (e.g., cannabidiol or CBD) while applying stringent quality standards. GLG is an industry expert in these crucial skills within the stevia sphere; these skills will be valuable assets in its cannabis-based business.
To advance its position in this industry, the Company has engaged in this strategic framework agreement to exclusively negotiate a majority ownership position with a leading Chinese hemp cultivator and planned producer of high-purity CBD oils and related products. The joint enterprise will be a B2B wholesale extraction business, including the production, marketing and selling of these CBD oils and products on a wholesale basis, focused initially on the Canadian and European markets.
This signed non-binding acquisition agreement between GLG and its Chinese counterpart will, contingent on performance of certain terms, including a registered capital contribution by GLG, provide GLG with a 55% controlling interest in this Chinese CBD company as well as control of the Board. As part of the agreement, GLG will also provide engineering design and consultation for the planned CBD extraction facility. All funds invested by GLG are to be used solely for facility construction and company development. The final agreement will be subject to due diligence, any necessary regulatory and governmental approvals, as well as GLG Board approval, and will be contingent on GLG securing the necessary funding for the acquisition.
The Company’s partner, Yunnan Guyimei Company (“Guyimei”), is the exclusive supplier of hemp agriculture in China’s Yunnan province, with a proven record of cultivating hemp varieties containing high levels of CBD. Guyimei is in the process of completing a CBD extraction facility within 2018 and, significantly, has a valuable and coveted license to export cannabis products. The initial capacity of this facility will be 1,000 kilograms (kg) of high-purity CBD oil and can be easily expanded as required to produce multiple metric tons (MT) per year. Guyimei’s existing agriculture license allows them to grow approximately 3,000 MT of hemp leaf on approximately 2,500 acres of land. This leaf would generate approximately 15-20,000 kg of high-purity CBD oil.
The two companies – Guyimei and GLG – complement each other well. Guyimei’s export licensure, its exclusive grower status and premium varietals, and its agricultural and anticipated production capacity make it a compelling partner for GLG for the production and export of CBD products. Conversely, GLG’s proven extraction and production expertise, its international QA practices and standards, and sales experience in the international marketplace, make GLG a compelling partner for Guyimei. GLG is already leveraging its innovative expertise in the areas of CBD extraction and improved hemp varietals, having arranged for the filing of four key CBD patents through its Chairman and CEO, Dr. Luke Zhang. GLG, like its international customers, considers quality to be paramount and reflects this mindset throughout its policies and production facilities, which adhere to exacting international standards and carry a full complement of international certifications covering good manufacturing (GMP) practices, diet-sensitive (e.g., Kosher/Halal) designations and safety concerns. And GLG, with its long experience in the international stevia business, knows what it takes to sell into international markets and to establish major supply agreements with national and global companies.
Importantly, GLG anticipates that the CBD oils produced in China by this partnership will have significantly lower costs compared to CBD oils produced in North America while still maintaining the highest levels of quality. GLG expects that this cost differential will be a long-term major advantage as this CBD endeavor establishes itself in the Canadian and international cannabis marketplace.
Thus, together, the two companies anticipate bringing a supply of low-cost, high-quality CBD oils and related products into the international cannabis market. While many companies in the burgeoning cannabis markets have focused on the recreational users of marijuana – those products integrate the psychoactive component of cannabis (THC) – CBD, the other primary cannabis oil, continues to be a major market segment. Notably, CBD has many healthful applications, including pain relief, sleep regulation, appetite stimulation, and digestive benefits. Indicative of its beneficial nature, CBD has a long history of use in traditional Chinese medicine as an important supplement. Like the rest of the cannabis market, the CBD segment is also growing rapidly: according to a new report from New Frontier Data, after observing that in the US alone, the CBD industry grew by nearly 40% in 2017, the report projects that the CBD industry is on track to grow to $2 billion by 2022.
Dr. Luke Zhang stated: “The cannabis/CBD market is expected to create significant value for GLG’s shareholders in addition to our stevia operations. We plan to run these businesses separately; however, we will leverage our extraction, agriculture and QA expertise in our CBD business. As a graduate from Vanderbilt University with a Ph.D. in Pharmacology, I truly appreciate the healthful nature of CBD products and the medical benefits that they bring. It is a natural fit for GLG, with its long history of producing and innovating with zero-calorie plant-based sweeteners as sugar replacements – healthful products are the core of its business. And GLG knows how to leverage its strengths and advantages as a Canadian-Chinese company into producing high-quality, well-priced products that are second to none.”
For further information, please contact:
Brian Meadows, President
Phone: +1 (604) 285-2602 ext. 105 Fax: +1 (604) 285-2606
Email: ir@glglifetech.com
About GLG Life Tech Corporation
GLG Life Tech Corporation is a global leader in the supply of high-purity zero calorie natural sweeteners including stevia and monk fruit extracts used in food, beverages, and dietary supplements. GLG’s vertically integrated operations, which incorporate our Fairness to Farmers program and emphasize sustainability throughout, cover each step in the stevia and monk fruit supply chains including non-GMO seed and seedling breeding, natural propagation, growth and harvest, proprietary extraction and refining, marketing and distribution of the finished products. Additionally, to further meet the varied needs of the food and beverage and supplement industries, GLG’s Naturals+ product line enables it to supply a host of complementary ingredients reliably sourced through its supplier network in China. For further information, please visit www.glglifetech.com.
Forward-looking statements:This press release may contain certain information that may constitute “forward-looking statements” and “forward looking information” (collectively, “forward-looking statements”) within the meaning of applicable securities laws. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes” or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
While the Company has based these forward-looking statements on its current expectations about future events, the statements are not guarantees of the Company’s future performance and are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors include amongst others the effects of general economic conditions, consumer demand for our products and new orders from our customers and distributors, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgments in the course of preparing forward-looking statements. Specific reference is made to the risks set forth under the heading “Risk Factors” in the Company’s Annual Information Form published March 31, 2018. In light of these factors, the forward-looking events discussed in this press release might not occur.
Further, although the Company has attempted to identify factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
As there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements, readers should not place undue reliance on forward-looking statements.
