Vancouver, BC, Canada, September 8, 2020, Xebra Brands Ltd. (“Xebra”) is pleased to provide an update on the status of its legal challenge of the Mexican constitution, which if successful, would result in Xebra, through its 100% owned Mexican subsidiary DESART MX, being the only entity to be legally authorized to import seeds, cultivate, and process cannabis (<1% THC) in Mexico, via the grant of an injunction by the Mexican Supreme Court. The injunction would also enable DESART to manufacture and commercialize cannabis derived CBD and CBG products, for domestic sale and for export.
During the last three years, the evolution of cannabis regulation in Mexico has shown a clear tendency towards a more liberal approach, and is evolving from a model of prohibition to a model of regulation. However, the cultivation and processing of cannabis, even for the sole purpose of producing CBD remains prohibited. This has created an unequal treatment in comparison with importers that can legally import CBD Isolates and industrial products, as long as such products do not contain over 1% THC.
This inequity forms the basis and legal grounds under which Xebra has implemented a legal strategy, that if successful, could result in Xebra holding an exclusive right in Mexico, for up to 18 months, on the cultivation and processing of Cannabis Sativa L (Hemp), for the purpose of extracting and commercializing CBD and CBG.
Background:
In late 2018, DESART MX applied to the COFEPRIS (the Mexican FDA) for a permit to plant, harvest and market Cannabis Sativa L (Hemp), with the purpose of extracting CBD. This filling was solely intended in order to obtain a negative resolution that could be challenged by DESART in court. As expected, the request to the COFEPRIS was denied.
On January 15, 2019, DESART filed a constitutional claim (an “Amparo”), based on the violation of multiple rights recognized by Mexican legislation, precedents of the Supreme Court, and scientific differences between cannabis strains (i.e. not all cannabis is psychoactive).
The Amparo (injunction) is a Federal Judiciary Procedure through which individuals or corporations, can challenge a decision of a regulatory or governmental authority, if among other things, the decision violates the Mexican Constitution.
The word Amparo literally translates to “protection of”; in effect it serves as a legal injunction. An Amparo is a mechanism through which the federal judiciary protects entities against the unlawful actions or resolutions of any regulatory or governmental authority in Mexico (including laws approved by Congress), if such actions contradict the principles established by the Mexican Constitution.
The Amparo that was filed by Xebra`s subsidiary DESART MX, is a first-time precedent for a constitutional claim against this specific prohibition which is established in the Federal Criminal Code. The claim has now moved beyond the lesser circuit courts and on September 7, 2020, has been accepted by the Mexican Supreme Court of Justice which will make a final ruling.
The file has already been assigned to Justice Norma Lucía Piña who will be preparing the resolution draft that will be voted by the 5 Justices that are part of the First Chamber of the Mexican Supreme Court.
Taking into consideration all of the facts and nuances, it is the opinion of Xebra’s legal team, that Xebra has a very strong case and a high probability of success. Unless there are delays associated with COVID-19, a final Supreme Court ruling is probable by the end of 2020.
For more information contact:
+1 (604) 418-6560
ir@xebrabrands.com
Certain information contained in this press release constitutes forward-looking statements under applicable securities laws. Any statements that are not statements of historical fact may be deemed to be forward-looking statements, these include, without limitation, statements regarding Xebra Brands Ltd.’s (“XEBRA” or “XEBRA’S”) expectations in respect of its ability to successfully execute its business plan or business model; its ability to provide economic, environmental, social, or any benefits of any type, in the communities it operates in or may operate it in the future; its ability to be a first mover in a country, or to obtain or retain government licenses, permits or authorizations in general, or specifically in Mexico, Colombia, Canada, the Netherlands, or elsewhere; its ability to raise capital and fund its ongoing operations; its ability to list its shares on a stock exchange or attain a public listing, its ability to successfully apply for and obtain trademarks and other intellectual property in any jurisdiction; its ability to be cost competitive; its ability to cultivate, grow, or process hemp or cannabis in Mexico, Colombia, Canada, the Netherlands, or elsewhere; its ability to manufacture cannabis beverages, wellness products, or other products; its ability to commercialize or sell cannabis beverages, wellness products, or other products, in Mexico, Colombia, Canada, the Netherlands, or elsewhere; its ability to commercialize or to sell Vicious Citrus Lemonade in 2021 or at any time, in any jurisdiction; its ability to commercialize or to sell Elements wellness products in Mexico, in Colombia, or in any jurisdiction in 2021 or at any time; its ability to make cannabis beverages that taste good; its ability to create wellness products that have a therapeutic effect or benefit; plans for future growth and the direction of the business; financial projections including expected revenues, gross profits, and EBITDA (which is a non-GAAP financial measure); plans to increase product volumes, the capacity of existing facilities, supplies from third party growers and contractors; expected growth of the cannabis industry generally; management’s expectations, beliefs and assumptions; events or developments that XEBRA expects to take place in the future; and general economic conditions. All statements, other than statements of historical facts, are forward-looking information and statements. The words “aim”, “believe”, “expect”, “anticipate”, “contemplate”, “target”, “intends”, “continue”, “plans”, “budget”, “estimate”, “may”, “will”, and similar expressions identify forward-looking information and statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by XEBRA as of the dates of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to, the inability of XEBRA to generate sufficient revenues or to raise sufficient funds to carry out its business plan; the inability of Xebra to list its shares for trading on a stock exchange; changes in government legislation, taxation, controls, regulations and political or economic developments in various countries; risks associated with agriculture and cultivation activities generally, including inclement weather, access to supply of seeds, poor crop yields, and spoilage; compliance with import and export laws of various countries; significant fluctuations in cannabis prices and transportation costs; the risk of obtaining necessary licenses and permits; inability to identify, negotiate and complete a potential acquisition for any reason; the ability to retain key employees; dependence on third parties for services and supplies; non-performance by contractual counter-parties; general economic conditions; and the continued growth in global demand for cannabis products and the continued increase in jurisdictions legalizing cannabis; and the timely receipt of regulatory approval for license applications. The foregoing list is not exhaustive and XEBRA undertakes no obligation to update or revise any of the foregoing except as required by law. Many of these uncertainties and contingencies could affect XEBRA’s actual performance and cause its actual performance to differ materially from what has been expressed or implied in any forward-looking statements made by, or on behalf of, XEBRA. Readers are cautioned that forward-looking statements are not guarantees of future performance and readers should not place undue reliance on such forward-looking statements. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those set out in such statements.