TORONTO, Nov. 20, 2018 /CNW/ - Alternate Health Corp.,
("Alternate Health" or the "Company") (CSE:AHG) (OTCQB:AHGIF), an international leader in technology
solutions for the regulated cannabis industry, announced that it has today signed an agreement to acquire a majority stake in
California cannabis company Kare MMJ. As part of the agreement, Alternate Health will also
acquire Bionic Bee, California's premiere flavoured cannabis extract manufacturer.
The acquisition will give the Company immediate exposure to California's value-added cannabis
market, with Kare MMJ's 5,000 square foot extraction facility in the Greater Los Angeles area.
Located in Sun Valley, part of Greater Los Angeles's San
Fernando Valley, Kare MMJ has operated as a not-for-profit under California's collective medical
marijuana regulations and is currently in the final stages of converting to a for-profit company and obtaining its state cannabis
license. Alternate Health expects to begin wholesale and retail sales of its products under California's new adult-use regulations by late January 2019.
"With Alternate Health's recent acquisition of distribution, processing and manufacturing licenses in Humboldt County, the Company is taking an aggressive approach to capturing a significant share California's adult-use cannabis market," says Dr. Michael Murphy, Chairman
and CEO of Alternate Health. "By incorporating Kare MMJ and Bionic Bee into Alternate Health, we immediately gain invaluable
market expertise and an established brand to move forward at this exciting time in the industry."
Founded in 2015, Kare MMJ is a leading producer of cannabis extract products. Through its flagship brand, Bionic Bee, the
Company has subsequently established a loyal medical cannabis following, gaining recognition for its creative flavours, ranging
from Maui Mango to Orange Diesel. Alternate Health intends to build on the success of the brand, expanding throughout
California's adult-use market, including the profitable business of wholesale extraction for
other California-based brands.
Proven Business Model and Revenue
Kare MMJ developed a strong customer base through its dispensary distribution channels. When the agreement closes, following
Kare MMJ's transition into a for profit company, with 66% owned by Alternate Health and 34% owned by partners involved in the
City of Los Angeles's Social Equity Program, Alternate Health will have the ability to
distribute Bionic Bee's top-of-the-line vape products in both medical and adult-use markets. The Company expects robust growth as
it continues to establish the brand and develop new products for California's lucrative cannabis
industry.
"Bionic Bee has a proven, market-ready business model," says Dr. Murphy. "With Alternate Health's investment into cannabis
distribution, processing and manufacturing, we plan on bringing Bionic Bee products to an increasing number of dispensaries
across California."
Alternate Health's acquisition of Kare MMJ and the Bionic Bee will represent another key step forward into California's regulated, adult-use cannabis market. Manufactured in Kare MMJ's Sun
Valley extraction facility, Bionic Bee extract products will complement Alternate Health's recent acquisition of cannabis
flower brand, Humboldt Ave. Products from both brands will be distributed through Alternate Health's licensed distribution
companies, with sourcing and processing supported by the Company's 14,800 square foot licensed facility in Humboldt County, California.
Value Added Products
Consumer demand for extract and vape products in the cannabis industry has been growing rapidly with sales increasing 400%
from 2015 to 2016* and industry experts estimate that in 2018, pre-filled vape cartridges will account for 60% of spending on
cannabis extract products.** Alternate Health has already developed strong relationships with dispensary operators throughout the
state and anticipates swift deployment of its product lines for sale to consumers.
Extract products garner significantly higher profit margins than cannabis flower and comprise a growing share of California's adult-use cannabis market. Offering extract products allows Alternate Health to build a strong
customer base through desirable products and distinctive flavours.
Terms of the Agreement
Under the agreement, Alternate Health acquires Kare MMJ along with Bionic Bee brand and related assets and intellectual
property ("Bionic Bee"). Highlights include Bionic Bee product inventory, equipment and salesforce, in addition to its social
media presence and flavour formulas. The transaction will close once Kare MMJ has successfully converted from a not-for-profit to
a for-profit entity.
As consideration for the purchase under the agreement, an aggregate of 2,000,000 Alternate Health common shares will be issued
at market price at the time of the closing. KareMMJ's managing member, Stephen Bugbee will receive
a USD$550,000 cash payment (payable in six monthly installments) and 1 million common shares of
Alternate Health. Stephen recently became a related party to the Company as described below. An additional 1 million common
shares of the Company will be paid to other members of KareMMJ who are not related parties to the Company. All shares issued will
be subject to a hold period of four months and one day from the date of issuance.
In October 2018, Stephen Bugbee joined Alternate Health as Senior
Vice President of Technology. Mr. Bugbee has also signed a 5-year management agreement with the Company to continue to manage the
Bionic Bee business. His management fee will be 20% of the monthly net income from the Bionic Bee business. As Mr. Bugbee is a
senior officer of the Company, the transaction is deemed to be a non-arm's length transaction.
About Alternate Health
Alternate Health (CSE: AHG, OTCQB: AHGIF) is an international cannabis company, focusing on technology and value-added
services in both medical and adult-use markets. Alternate Health's industry-leading software systems provide the platform for the
company's diverse operations, including adult-use distribution and the first medial cannabis online shopping portal approved by
the Florida Department of Health.
Alternate Health has decades of combined experience in the industry, developing deep relationships with the world's premiere
producers of high-quality cannabis and established retailers with strong customer bases in the Greater
Los Angeles area. A licensed cannabis distributor and manufacturer, Alternate Health operates premium flower brand
Humboldt Ave and California's first blockchain-powered, vertically-integrated distribution
network, from the Company's nine-acre facility in Humboldt County, the world's most famous
cultivation region.
Alternate Health's corporate office is located in Toronto, Canada, with additional offices in
Venice and Humboldt County, California and San Antonio, Texas. The Company is well positioned to reinvest internal operating cash flow in its platform
and product development over the long term, creating an attractive investment profile for its shareholders.
Alternate Health resides in the cannabis sector along with companies like GW Pharmaceuticals, AXIM Biotechnologies Inc.,
Canopy Growth Corporation, and Aphria Inc. For more information about Alternate Health Corp., visit www.alternatehealth.ca.
Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts
responsibility for the adequacy or accuracy of this release. Statements included in this announcement, including statements
concerning our plans, intentions and expectations, which are not historical in nature are intended to be, and are hereby
identified as "forward-looking statements". Forward-looking statements may be identified by words including "anticipates",
"believes", "intends", "estimates", "expects" and similar expressions. The Company cautions readers that forward-looking
statements, including without limitation those relating to the Company's future operations, business prospects, anticipated
growth and potential revenues, derived from the Bionic Bee asset purchase are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in the forward-looking statements.
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SOURCE Alternate Health Corp.
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