CanniMed Therapeutics Inc. (OTC: CMMDF) (TSX: CMED) announced on Tuesday it reached an agreement with Up Cannabis for the production and supply of 1,5000 kilograms of cannabis over the next 15 months as demand is increasing with Canada set to legalize marijuana.
Canada is preparing to legalize the production, sale and consumption of recreational marijuana, prompting a wave of deals by companies to cash in on the market and secure supply.
The supply agreement will provide the raw material for CanniMed oils and oil derivative products, including capsules. The two companies will also collaborate on a THC-rich, whole dried flower, medical cannabis product, demanded by patients. The agreement also provides CanniMed with access to an uninterrupted supply of up to 100kg of product per month from Up Cannabis’ Brantford facility. The term of the agreement is 15 months, subject to renewal by the parties and anticipated revenue to be generated is roughly $15M.
“This is the first of many anticipated synergies between CanniMed and Up Cannabis, and demonstrates the accretive combined value of the two companies. With sales of CanniMed® 1:20 oil surging, this supply agreement allows continued growth to meet increasing demand for our medical cannabis products domestically and internationally,” said Brent Zettl, President and CEO, CanniMed. “Access to consistent supply is the key differentiator in today’s fast-growing medical cannabis market. Between CanniMed’s expanding facilities in Saskatoon and Up Cannabis’ Ontario operations we can supply both the medical and recreational market, with a projected 2019 combined production capacity of 45,000kg.”