The 3-year contract commits 20% of PharmHouse's cannabis production to Canopy Growth
TORONTO, May 9, 2019 /CNW/ - Canopy Rivers Inc. ("Canopy Rivers" or the "Company") (TSXV: RIV) (OTC: CNPOF) is pleased to announce that its portfolio company PharmHouse Inc. ("PharmHouse") has entered into a second offtake agreement (the "Agreement") with Canopy Growth Corporation ("Canopy Growth") (TSX: WEED) (NYSE: CGC) for the purchase of cannabis from its 1.3 million square foot greenhouse facility upon licensing. The Agreement commits an additional 20% of PharmHouse's flowering space to Canopy Growth for the next three years, in addition to the 10% that was originally committed in May 2018. The Agreement provides for the delivery to Canopy Growth of a minimum of 25,000 kg of cannabis per year and a maximum of 45,000 kg of cannabis per year.
"PharmHouse continues to show tremendous progress at the facility, and the joint venture is quickly developing as a key pillar for value creation and synergy within the Canopy Rivers portfolio ecosystem," said Olivier Dufourmantelle, Chief Operating Officer of Canopy Rivers. "Thanks to the collaborative contributions of our joint venture partners, the ongoing support and guidance of Canopy Rivers, and the strategic insight of Canopy Growth throughout the licensing process, we are excited to announce an incremental supply partnership that mutually benefits all three parties."
This new supply arrangement provides PharmHouse with additional revenue visibility and financial de-risking for a significant portion of the expected production from the flagship facility. Canopy Rivers holds a 49% equity interest in the PharmHouse joint venture and has played an active role in sourcing and negotiating production and supply agreements, which now cover approximately 50% of expected annual output. The incremental 50% of output remains unencumbered for the development of PharmHouse's own suite of brands and products.
"This offtake agreement represents a significant step forward for PharmHouse. By effectively committing and selling 50% of our near-term cannabis production, we favorably position PharmHouse for the development of a proprietary suite of products and brands and/or the pursuit of incremental contract manufacturing agreements," said Tony Abbas, General Manager of PharmHouse. "The fact that we are executing yet another agreement with an industry titan like Canopy Growth sends a strong signal about the quality of our operations and the confidence in our team's ability to deliver."
The 1.3 million square foot facility in Leamington represents the first stage of a planned global strategic relationship between Canopy Rivers and its PharmHouse joint venture partner, a company formed by the leading principals and operators of a North American agriculture conglomerate. The parties seek to leverage their relationship networks and respective strengths in cannabis, global commercial agriculture, marketing, and distribution to pursue regulated cannabis opportunities together on a global scale.
Formed by Canopy Rivers and a company formed by the leading principals and operators of a North American agriculture conglomerate, the PharmHouse joint venture operates out of an ultramodern 1.3 million greenhouse facility in Leamington, Ontario, constructed in 2017 using the latest in commercial agriculture technology and featuring state-of-the-art automation systems. Canopy Rivers, along with its PharmHouse joint venture partners, are actively upgrading and supplementing the facility in preparation for licensing. In January 2019, PharmHouse entered into a syndicated credit facility providing up to C$80 million of secured debt financing. PharmHouse has secured multiple offtake agreements for an aggregate 50% of the production capacity upon licensing.
About Canopy Rivers:
Canopy Rivers is a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. Canopy Rivers works collaboratively with Canopy Growth Corporation (TSX: WEED, NYSE: CGC) to identify strategic counterparties seeking financial and/or operating support. Canopy Rivers has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth and collaborate among themselves, which Canopy Rivers believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem.
This news release contains statements which constitute "forward-looking information" within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of Canopy Rivers with respect to future business activities and operating performance. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and includes information regarding: PharmHouse's future revenue, production and output including its own suite of brands and products; the receipt of a cultivation license by PharmHouse; PharmHouse's continued progress and ability to create value and synergy in the Canopy Rivers ecosystem; the benefits of the Agreement for the parties thereto; the signal sent by the Agreement and the impact of the Agreement on PharmHouse's financial risk; the favourable positioning of PharmHouse for the development of a proprietary suite of products and brands and/or the pursuit of incremental contract manufacturing agreements; the relationship between Canopy Rivers and PharmHouse and their plan to pursue opportunities on a global scale; and other expectations for economic, business and/or competitive factors.
Investors are cautioned that forward-looking information is not based on historical facts but instead reflects management's expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although Canopy Rivers believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of Canopy Rivers. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: regulatory and licensing risks; PharmHouse's actual financial performance, product and brand development, production and capacity; the ability of PharmHouse to obtain a cultivation license under applicable legislation in Canada; the ability of PharmHouse and Canopy Rivers to collaborate and for PharmHouse to contribute to the Canopy Rivers ecosystem; competition for global, regulated cannabis opportunities; changes in general economic, business and political conditions, including changes in the financial markets; the global regulatory landscape and enforcement related to cannabis, including political risks and risks relating to regulatory change; risks relating to anti-money laundering laws; compliance with extensive government regulation; public opinion and perception of the cannabis industry; and the risk factors set out in Canopy Rivers' final short form prospectus dated February 21, 2019, filed with Canadian securities regulators and available on Canopy Rivers' profile on SEDAR at www.sedar.com.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although Canopy Rivers has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Canopy Rivers does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Canopy Rivers Inc.
For further information: Canopy Rivers Inc., Karoline Hunter, Sr. Director, Investor Relations & Communications, E-mail: [email protected]