Emblem Signs Supply Agreement with Aphria to Purchase up to 175,000 kg Equivalents of Cannabis Products Over Five Years
Emblem (TSXV:EMC,OTCQX:EMMBF) (“Emblem” or the “Company”), through its wholly-owned subsidiary Emblem Cannabis Corporation, a licensed producer of medical cannabis under the Access to Cannabis for Medical Purposes Regulations (“ACMPR”), today announced that it has entered into a five-year wholesale supply agreement (the “Agreement”) with Aphria Inc. (“Aphria”) (TSX: APH, US OTC: APHQF). The Agreement will see Emblem purchase up to an aggregate of 175,000 kg equivalents of cannabis products from Aphria over a five-year term (the “Initial Term”), with the opportunity for five-year renewals. Pursuant to the Agreement, Emblem will pay to Aphria an initial deposit comprised of a cash payment of $12,755,625 and the issuance of 6,952,169 common shares of Emblem (the “Emblem Shares”).
Commencing in May 2019, Aphria will provide Emblem with a mix of dried flower and crude cannabis oil to be processed at Emblem’s Paris, Ontario facility. Emblem’s team will work with Aphria’s cultivation team to grow Emblem’s proprietary strains at Aphria’s Leamington, Ontario greenhouse.
“Emblem’s supply agreement with Aphria marks a critical point in our evolution. It allows Emblem to remain focused on strengthening our core competencies of product innovation, brand building and securing distribution,” said Nick Dean, CEO, Emblem Corp. “Aphria’s support solidifies Emblem’s dedication to become a leading producer of cannabis-derived products in the health and wellness space.”
Emblem will continue to innovate and develop new, exciting products for Canada’s cannabis patients and consumers including capsules, new oral sprays that are expected to be released to the market later this month, a sustained release formulation in partnership with Canntab, and a health and beauty line with GreenSpace Brands. The Company’s Paris, Ontario facility will continue to produce approximately 2,000 kg of high-quality indoor dried flower annually. The facility’s 30,000 sq. ft. addition featuring a 5,000 sq. ft. GMP laboratory, that is nearing completion, will further support product innovation and enable Emblem to pursue international export opportunities.
Supply Agreement Overview
Emblem has entered into a five-year supply agreement with Aphria pursuant to which Aphria will supply Emblem with up to an aggregate of 175,000 kg equivalents of high quality dried cannabis flower and crude cannabis oil at preferred wholesale pricing. Initial product deliveries to Emblem are expected to commence in May 2019, with a total of 25,000 kg equivalent deliverable for the balance of the first year of product deliveries.
Pursuant to the Agreement, Emblem will pay to Aphria an initial deposit comprised of a cash payment of $12,755,625 and the issuance of 6,952,169 Emblem Shares. The issuance of the Emblem Shares is subject to the approval of the TSX Venture Exchange. Following completion of the issuance of the Emblem Shares, Aphria is expected to own approximately 5.5% of Emblem’s issued and outstanding common shares. In connection with the issuance of the Emblem Shares, Aphria has agreed to certain standstill restrictions and a staggered lock-up provision subject to certain exceptions.
The Agreement is expected to significantly increase Emblem’s total available cannabis over five years and will allow the Company to remain laser-focused on product innovation, brand building and securing distribution.
Echelon Wealth Partners acted as exclusive financial advisor to Emblem and Dentons Canada LLP acted as legal counsel to Emblem in connection with the Agreement.
Emblem, through its wholly-owned subsidiary Emblem Cannabis Corporation, is a fully integrated licensed producer and distributor of medical cannabis and cannabis derivatives in Canada under the Access to Cannabis for Medical Purposes Regulations (ACMPR). Emblem’s state-of-the-art indoor cannabis cultivation facility and research and development laboratory is located in Paris, Ontario. Led by an experienced management team of healthcare executives, accomplished marketing professionals, and cannabis experts, Emblem is focused on driving shareholder value through product innovation, brand relevance, and access to patient and consumer channels. Emblem is also the parent company of GrowWise Health Limited, one of Canada’s leading cannabis education services. Emblem trades under the ticker symbol EMC on the TSX Venture Exchange.
For more information, please visit www.emblemcorp.com.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This news release contains certain forward-looking statements and forward-looking information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “achieve”, “could”, “believe”, “plan”, “intend”, “objective”, “continuous”, “ongoing”, “estimate”, “outlook”, “expect”, “may”, “will”, “project”, “should” or similar words, including negatives thereof, suggesting future outcomes. Management of the Company believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to the Company, including data from publicly available governmental sources as well as from market research and industry analysis and on assumptions based on data and knowledge of this industry which Emblem believes to be reasonable. However, although generally indicative of relative market positions, market shares and performance characteristics, such data is inherently imprecise. While Emblem is not aware of any misstatement regarding any industry or government data presented herein, the medical marijuana industry involves risks and uncertainties and is subject to change based on various factors.
Forward-looking statements are not a guarantee of future performance and are subject to and involve a number of known and unknown risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company’s actual performance and results to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in the Company’s December 31, 2017 Management’s Discussion and Analysis, which has been filed with the Canadian Securities Administrators and available on www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, the Company assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.
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