Valens GroWorks (CSE: VGW) (OTC: VGWCF) has agreed to provide cannabis and hemp extraction services to Tilray Canada Ltd. (NASDAQ: TLRY).
Under a multi-year extraction services agreement, Valens will extract a minimum annual quantity of 15,000kg of dried cannabis and hemp.
As part of the deal, Valens will receive and process the cannabis and hemp on a fee for service basis into crude, distillate or other cannabis oil derivatives as required by Tilray before bulk shipping the desired product back to Tilray for final processing and sale.
The agreement is renewable annually after the initial two-year term.
Valens is a Canadian cannabis company focused on downstream secondary extraction methodology, distillation and cannabinoid isolation and purification, as well as associated quality testing. It has three wholly-owned subsidiaries that are located in and around Kelowna, B.C.
Recently, Valens reported that it expanded its annual extraction capacity to 240,000 kilogram of dried cannabis input. The expansion, according to Valens, makes it the largest third-party extraction company in Canada.
Tilray is one of the first companies to be licensed to produce medical cannabis in Canada.
Last week, the company announced an agreement to acquire all of the issued and outstanding securities of FHF Holdings from Compass Group Diversified Holdings (NYSE:CODI) and other shareholders.
Under the agreement, Tilray will acquire FHF Holding on a cash and debt-free basis for an aggregate purchase price of up to C$419 million. The price includes cash and class 2 common stock in the capital of Tilray.