Cresco Labs and Origin House Announce Substantial Compliance with HSR Second Request

Cresco Labs and Origin House Announce Substantial Compliance with HSR Second Request

VANCOUVER, British Columbia–(BUSINESS WIRE)–PRESS RELEASE–Infused cannabis beverages company, BevCanna Enterprises Inc. has announced that is has signed a definitive agreement with Clearwater CannGrow Inc. to grow certified organic sun-grown cannabis on an aggregate 130-acre plot of land on BevCanna’s allocated property near Osoyoos, B.C. Following the announcement on Sept. 4, 2019, of the signing of a letter of intent to the same effect, the parties have now finalized the agreement.

The agreement sees BevCanna combining its extensive beverage, bottling and branding expertise with Clearwater’s cannabis cultivation and operational skills on BevCanna’s prime outdoor cultivation site. Clearwater’s expert agricultural consultant, Joey Bedard-Brunet, has agreed to plan and operate the cultivation using Good Agricultural Practices.

“We’re very pleased to have finalized the agreement with Joey and Clearwater CannGrow,” said John Campbell, chief strategic officer at BevCanna. “Joey’s expertise across a range of agricultural industries strongly complements BevCanna’s manufacturing and branding expertise. Together, we’ll be an unbeatable combination.”

As co-owner of a large-scale hemp farm, an outdoor cannabis farm and other agricultural businesses, Bedard-Brunet is a farm start-up expert. With formal training in both farming and horticulture, he has also designed and executed one of the largest organic industrial hemp farms in western Canada.

The company expects to produce over 100,000 kg of biomass, and a yield of over 10,000 kg of pure cannabinoids through the finished extract. BevCanna is well-positioned to become a global leader in the production of high-quality, next-generation products, in the lead-up to Canada’s legalization of next-generation products later this year.

The parties also agreed to explore future expansion of the outdoor cannabis production, through the option of another site nearby in Bridesville, BC, and through the future lease of land from indigenous groups in prime growing areas in the Interior of B.C. The execution of all proposed phases would allow BevCanna to develop into the largest outdoor cannabis cultivator in B.C.

Structure of the Partnership

Clearwater has been engaged by BevCanna for an indefinite term as contract grower for BevCanna. Headed by Founder and CEO Joey Bedard-Brunet, Clearwater has agreed to oversee and manage all the day to day operations, with Bedard-Brunet as the initial manager and head grower/cultivator on the license. BevCanna plans to have the outdoor cultivation license application submitted by end of November 2019, obtain the outdoor cultivation license and plant the first crop by spring 2020, with an anticipated fall 2020 harvest.

Summary of Terms of the Transaction

Consultant Fee: Among other terms, upon satisfactory performance of the services to be provided by Clearwater, the company agreed to pay Clearwater a consulting fee, comprised of various payments, which is payable only in the event the company is granted its license for outdoor cannabis cultivation. The consulting fee payments are:

  • a cash fee of $200,000, payable on Nov. 1 of the first year in which a crop is cultivated at the property;
  • a bonus of $50,000, payable ten business days after the issuance of the outdoor cultivation license, in securities of the company;
  • a bonus of $50,000, payable in cash or securities of the company, payable on Nov. 1 of the first crop year in the event that the company harvests at least an aggregate of 200,000 pounds of cannabis flower and biomass at the Property during the first crop year;
  • a cash fee of $200,000, payable on Nov. 1 of the second year in which a crop is cultivated at the property;
  • a bonus of $50,000, payable in cash or securities of the company, payable on Nov. 1 of the second crop year in the event that the company harvests at least an aggregate of 300,000 pounds of cannabis flower and biomass at the property during the second crop year;
  • a cash fee of $200,000, plus all applicable taxes, payable on Nov. 1 of the third year in which a crop is cultivated at the property;
  • a bonus of $50,000, payable in cash or securities of the company, payable on Nov. 1 of the third crop year in the event that the company harvests at least 300,000 pounds of cannabis flower and biomass at the property during the third crop year; and
  • for sales of the company’s cannabis products generated by Clearwater’s direct efforts, the company agreed to pay to Clearwater, during the term of the agreement, a commission equal to 15 percent of the net revenue derived from such sales.

Share purchase: Clearwater agreed to purchase 982,142 common shares of the company at a price of $0.56 per share for a total purchase price of $549,999.52. Closing is expected to occur by the end of September 2019. All securities issued to Clearwater in the share purchase will be subject to a statutory hold period expiring four months and one day after closing of the share purchase.

Services: The services to be provided under the agreement include: planning, supervision and operation of the farming operation utilizing Good Agricultural Practices; assistance with the cultivation license application; studying the feasibility of expanding production, and acting as named grower and cultivator on the license application.

Published at Tue, 17 Sep 2019 18:34:00 +0000

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