Valens GroWorks (CSE: VGW) (OTC: VGWCF) has signed a multi-year extraction services agreement to provide cannabis and hemp extraction services to HEXO Corp. (TSX: HEXO) (NYSE-A: HEXO).

The agreement has an initial two-year term from the date of the first shipment. HEXO will supply Valens with an annual minimum of 30,000kg in the first year and 50,000kg in the second year of both cannabis and hemp biomass.

Under the agreement, Valens will process the cannabis and hemp material on a fee for service basis into resins and distillates using its extraction processing methods.

The agreement contains provisions under which it may be terminated with 90 days written notice after the one-year anniversary.

Valens expects to receive and begin processing the first shipment from HEXO early in the third quarter of 2019.

“On the eve of edibles and concentrate legalization in Canada, this agreement will allow our company to bring an expanded offering to market, creating innovative products to deliver exceptional cannabis experiences to consumers,” James McMillan, vice-president of strategic business development at HEXO, said in a statement.