Canopy Rivers Inc. (TSX-V: 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.