New Collaboration Joins Three of the Worlds Most Influential Cannabis Businesses
Canopy Growth, Organa Brands, Green House Seeds Collaborate to bring New Products to Canadian Market and Beyond
SMITHS FALLS, ON, DENVER and AMSTERDAM, Nov. 17, 2017 /CNW/ – Green House Holdings North America Inc. (“Green House“), its affiliate in the Netherlands, GHSC Trading B.V., National Concessions Group Inc. (“Organa Brands“) and Canopy Growth Corporation (“Canopy Growth” or “the Company”) (TSX: WEED), together three of the most storied and successful global cannabis businesses are pleased to announce the planned creation of a collaborative joint venture (the “JV”).
To establish the JV, Canopy Growth will allocate a portion of ownership in ACMPR-licensed Agripharm Corp. (“Agripharm”), a 20,000 sq. ft. indoor growing facility located in Creemore, Ontario, to its new partners. Canopy Growth will retain 40% ownership of Agripharm, while Green House and Organa Brands will own 40% and 20%, respectively, of Agripharm. In exchange for the issuance of shares, Green House and Organa Brands have granted an exclusive, royalty-free licence in Canada to certain proprietary technology, trademarks, genetics, know-how and other intellectual property to Agripharm, subject to compliance with applicable law.
The JV will create a new Canadian home-base for Green House and Organa Brands where they will work together with Canopy Growth to produce cannabis products for the Canadian market. Pursuant to the JV, the Company has the right to purchase all of the cannabis products produced by Agripharm to be exclusively distributed via Canopy Growth’s national channels, subject to limited exceptions. In addition, the Company will sublicense the proprietary technology, trademarks, genetics, know-how and other intellectual property from Agripharm in order to ensure that Canopy Growth is able to satisfy consumer demand across Canada for the suite of Green House and Organa Brands products.
Although Agripharm is focused on the Canadian market, Canopy Growth, Green House, Organa Brands and their respective affiliates will also explore other federally-legal international opportunities as they arise, including with respect to medical research and development opportunities, product distribution platforms, and brick-and-mortar retail locations. Agripharm will not conduct any business in the United States.
“Our business has separated itself from the competition by focusing on brands and products that resonate with people but also because we’ve found creative ways to collaborate with like-minded businesses to increase the breadth of our product offering,” said Mark Zekulin, President, Canopy Growth. “From world-class breeders like our partners DNA Genetics and now Green House Seeds, to sector innovators like Organa Brands, to cultural icons like Snoop Dogg, we work with the best in order to bring the best possible cannabis forward to our customers.”
The JV is expected to close on or about December 1, 2017. Operationally, Canopy Growth will transfer oversight to its new collaborators who will operate a pristine licensed facility with modular growing rooms designed to produce only the very best cannabis flowers. Green House will oversee day-to-day operations and bring their own expertise into cultivation, while Organa will implement world-class extraction functions as new and novel value-add products become part of the regulatory environment. Canopy Rivers Corporation, a partly-owned subsidiary of Canopy Growth, has also entered into an agreement to provide the JV with up to $20 million in funding for the expansion of the facility in exchange for ongoing royalty payments and a warrant to acquire up to 4% of the issued and outstanding common shares.
“For 30 years Green House Brands has been at the forefront of cannabis legalization by advocating for its normalization and expansion into new territories,” said Arjan Roskam, the founder of Green House Brands. “We’re now operating in four continents (Europe, Africa, South America and North America) and thanks to this new partnership with these two prominent market leaders in the industry, Canopy and Organa Brands, we will create even more opportunities globally to help the world access cannabis in a legal way. This epic move will allow us to maintain our position as a world leader in genetics and cannabis retail, while alerting the cannabis consumer that we will continue striving to make cannabis available worldwide for all medicinal and recreational consumers one day.”
Canopy Growth, Green House, and Organa Brands each bring a unique set of skills that are strategically complementary to one another. Canopy Growth has built an online distribution platform that touches every province and territory in Canada as well as 7 international markets; Green House is a genetic leader that has bred some of the world’s most sought-after strains; and Organa Brands is an extract product innovator. Together, the JV is positioned to take sought after genetics, insert those genetics into consumer-friendly ingestion formats, and put them on stores shelves across the country, and abroad.
“We are incredibly excited about this new partnership – since the inception of Organa Brands, one of the key tenets of our business has been forming smart partnerships with mutually beneficial results. Working with Canopy and Green House has been a surreal moment as we continue to fully recognize the impact of what this deal means for the industry as a whole” said Organa Brands Co-Founder, Jeremy Heidl. “We couldn’t have asked for better partners in Canada and beyond- this new global partnership will prove to be a defining moment for all parties involved.”
Cassels Brock & Blackwell LLP acted as legal counsel to Canopy Growth with respect to the JV, Dentons Canada LLP acted as legal counsel to Green House, and Stikeman Elliott LLP acted as legal counsel to Organa Brands.