Canopy Growth Corporation (NYSE:CGC) is making strides towards stamping its position as the a leading diversified cannabis and hemp-based company. The company has announced a couple of agreements it has entered with 48North Cannabis Corp alongside a strategic partnership with the hemp-based company.
According to the terms of the Supply Agreement signed by the two companies, 48North is tasked with supplying Canopy Growth with high-grade dried cannabis. The supply will be made from 48North’s 100% owned Delshen Therapeutics Corp. Delshen is expected to supply Canopy Growth with no less than 1.2 tons of dried cannabis to be used in the manufacture of Canopy’s products.
The first batch of 100 kilograms is scheduled to be shipped from Delshen’s facility by December 5. The remaining lot will be spread over the twelve months of 2019.
Moving on to a related topic, Canopy purchased 4 million common units of 48North for $3 million translating to about $0.75 per unit. Cumulatively, this adds up to a 3.4% stake in the cannabis company. Each unit of the total 4 million units purchased (according to the terms of the agreement) is equivalent to a single common share and a quarter common share purchase warrant. A holder of each complete warrant can acquire an extra common share of 48North at will at a strike price of $1.15.
Though not legally binding but purely on a best-effort basis, the two partners will stage collaborative efforts to ensure that their products enjoy a national retail presence in Tokyo Smoke and Tweed stores.
To a brighter future
The management of the two companies praised the new agreements and investment deals affirming that they will jointly work to ensure that they strengthen the two brands.
Canopy’s President and co-CEO Mark Zekulin, asserted that “Through CraftGrow and Canopy Rivers we’ve always sought supplemental sources of supply in order to offer customers a diverse range of products. By adding 48North to the broader repertoire we’ll strengthen our ability to bring exciting cannabis products to market. “