Curaleaf Completes Acquisition Of EMMAC And Secures $130 Million Investment From A Single Strategic Institutional Investor

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EMMAC brings vertically integrated operations in Europe with a presence in key medical cannabis markets, including the UK, Germany, Italy, Spain, and Portugal

MASSACHUSETTS:  Curaleaf Holdings, Inc., a leading international provider of consumer products in cannabis has successfully completed the previously announced acquisition of EMMAC Life Sciences Limited, the largest vertically integrated independent cannabis company in Europe, for base consideration of approximately US$50 million in cash and 17.5 million shares of Curaleaf, with additional consideration to be paid based upon the successful achievement of performance milestones. Curaleaf has simultaneously established Curaleaf International Holdings Limited in Guernsey to hold the EMMAC investment and further its European expansion.

To accelerate the expansion of Curaleaf International, Curaleaf has secured an investment of US$130 million from a single strategic institutional investor in exchange for 31.5% equity stake in Curaleaf International, implying a $413 million Post Money valuation, with US$80 million in cash available to spend. The subscription will fund the entire cash portion of the EMMAC acquisition consideration of US$50 million with the remaining US$80 million to be used to fund Curaleaf International’s current capital expenditures plan through 2022, as well as its pipeline of potential acquisitions. This infusion of outside capital into Curaleaf International significantly accelerates Curaleaf’s expansion plans in Europe by fully funding Curaleaf’s cash outlay for the EMMAC acquisition and providing the capital required to support Curaleaf International’s near-term European rollout. With its foreseeable expansion budget fully funded, Curaleaf’s new international business can focus on executing its further European expansion.

Curaleaf and the strategic investor have entered into a shareholders’ agreement regarding the governance of Curaleaf International pursuant to which Curaleaf will have control over operational issues as well as raising capital and the ability to exit the business. In addition, the strategic investor’s stake is subject to put/call rights which permits either party to cause the stake to be bought out by Curaleaf for Curaleaf equity starting in 2025.

Boris Jordan, Executive Chairman of Curaleaf, stated, “The successful completion of our acquisition of EMMAC, and the formation of our new Curaleaf International business, marks a transformational launching point for our entrance into the European cannabis market. Building on our market leading position in the U.S., this transaction establishes Curaleaf as the global, pure play, cannabis market leader by revenue and geographic reach. With our single strategic institutional investor, we have set a strong foundation for Curaleaf International’s future growth trajectory. On behalf of the Curaleaf Board of Directors and management team, we are thrilled to welcome Antonio Costanzo, co-founder and CEO of EMMAC, as the CEO of Curaleaf International, and the entire EMMAC team to Curaleaf.”

The new Curaleaf International platform includes cultivation, EU GMP-certified processing, distribution, and R&D operations across several key European medical cannabis markets, including the United Kingdom, Germany, Italy, Spain and Portugal. Terra Verde, Curaleaf International’s European market cultivation facility in Portugal, is one of the oldest licensed cannabis growing facilities in Europe with approximately 2 hectares of cultivation area and is an industry leader on the cannabis production cost efficiency front. The Portugal based cultivation facility provides Curaleaf International with the potential to serve customers across key European medical cannabis markets as well as supporting exports to countries such as Israel, among others. Curaleaf International plans to significantly increase its cultivation capacity in 2021, and to exceed 10 tons per year by 2022, in order to accommodate future growth related to the expansion of access to cannabis across the major European medical and adult-use, as well as export markets. Curaleaf International also has an operational presence and partnerships in European Union countries that are enacting new medical cannabis access programs. Curaleaf International will also serve as the platform for other possible acquisitions in Europe and adjacent areas, and for its participation in pilot adult use programs.

Joseph Bayern, CEO of Curaleaf, commented, “As the consumer and political liberalization trends around cannabis that are sweeping the U.S. are increasingly taking hold across Europe, our expansion into the international cannabis market presents tremendous new long-term growth opportunities for Curaleaf. With the European population of nearly 748 million1, the potential European addressable market is more than twice the size of the U.S. addressable market2. With the ability to operate our new European business across country borders, with one or two cultivation sites and one manufacturing center to serve the entire region in most cases, combined with our ability to leverage the strength of our consumer packaged goods strategies and innovations from our U.S. operations, we see enormously positive implications for our ability to quickly and efficiently scale the business across Europe.”

Following the successful completion of the transaction, Mr. Antonio Costanzo has been appointed as the new Chief Executive Officer of Curaleaf International, with the former EMMAC management team continuing to lead Curaleaf’s new European presence as well as driving local European strategy and day-to-day operations.

Antonio Costanzo, CEO of Curaleaf International, commented, “This is an important day for the European cannabis market as EMMAC transitions to Curaleaf International. I look forward to working closely with the Curaleaf team to shape the future of cannabis for our patients and customers around the world. We will retain our science-led approach to continue to deliver best in class cannabis products for Europe’s growing medical cannabis market, and will work closely to leverage the consumer packaged goods experience and innovation from the U.S. to capitalize on the emerging adult-use market as legislation allows. We are now very well positioned to realize our aggressive growth ambitions.”

Canadian Border Security Agency Sets New Penalties For Crossing The Border With Cannabis

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CANADA:  On October 17, 2018, the Cannabis Act came into force, introducing a strict framework for controlling cannabis within Canada. While cannabis was legalized, it does remain illegal to carry cannabis across the border without a valid permit or exemption. As part of Canada’s legalization plan, the Canada Border Services Agency (CBSA) at the time committed to establishing a monetary penalty system for cannabis infractions at the border. The CBSA previously provided public notice of this intention in its 2019-2020 departmental plan.

For this reason, and as part of the enforcement measures supporting the Cannabis Act, effective March 29, 2021 at 12 a.m. EDT, the Canada Border Services Agency (CBSA) will begin issuing monetary penalties to travellers who fail to properly declare cannabis and cannabis products when crossing the border. This is another tool, besides criminal prosecution, to crack down on the unauthorized cross-border movement of cannabis in any form.

The CBSA’s Administrative Monetary Penalty regime sets out monetary penalties for cannabis-related contraventions of the Customs Act. The penalties will apply to travellers who:

  • provide information to an officer that is not true, accurate, and complete; or
  • fail to report imported goods containing cannabis.

A border services officer will detain the undeclared cannabis or cannabis products with no terms of release and serve the traveller with a written Notice of Penalty Assessment that states the contravention and a penalty ranging from $200 to $2,000. The amount of the penalty will be based on:

  • type of contravention (undeclared cannabis, inaccurate information);
  • severity (undeclared cannabis is concealed, quantity of undeclared cannabis); and,
  • history of non-compliance (having a penalty issued in the past and/or a past seizure record).

Depending on the seriousness and nature of the offence, the CBSA may pursue criminal prosecution in addition to the monetary penalty. If convicted, travellers may face imprisonment, a court fine, or both.

Quick facts

  • Under the Cannabis Act, it remains illegal to import into Canada, or export from Canada, cannabis and cannabis products (including CBD products derived from cannabis or hemp) without a valid permit or exemption issued by the Government of Canada.
  • The Government of Canada is working to reduce the burden on the criminal justice system resulting from cannabis-related offences, while still deterring illegal activities.
  • Travellers who disagree with the monetary penalty will have 90 days to request a ministerial review of the officer’s decision.
  • The CBSA also reminds Canadians that although the possession of cannabis is legal in some U.S. states, it remains illegal under U.S. federal laws. Do not attempt to cross the Canada-U.S. border with any amount of cannabis in any form, even if you are travelling to a U.S. state that has legalized possession of cannabis.

WeedMD Makes Changes To Leadership, Names George Scorsis Interim CEO

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CANADA:  WeedMD, a medical cannabis licensed company operating in Strathroy, Ontario, has a new leader at its helm.

WeedMD announced that George Scorsis will take over as the organization’s Interim CEO. Since 2019, Scorsis has served as WeedMD’s Executive Chairman.  Currently, the company owns and operates a 158-acre state-of-the-art greenhouse and processing facility.

“As we continue on the path of executing our new product strategy and building an expanded distribution network, we are initiating a leadership transition that will position us strongly for this next phase. Additionally, the organization will focus on optimizing all aspects of the business,” Scorsis commented.

During his time at WeedMD, Scorsis has served in a variety of roles and has led initiatives and managed relationships with members and key stakeholders. He has over 25 years of business experience and was instrumental in restructuring Red Bull Canada, growing the company to $150 MM in revenue and also acted as President of Mettrum, a licenced producer.

In addition to this news, most recently, WeedMD announced the expansion of its Cannabis 2.0 product portfolio, with the introduction of terpene-infused vapes to be sold under its Saturday Cannabis branded line-up.  The flavored strains, which come in lemon haze and sour pineapple, are available to consumers through the Ontario Cannabis Store.

The launch of flavored vapes is another way the company is executing on its commercial growth plans.

“We are kicking off 2021 with a focused approach on increasing market share and commercial growth of our Color Cannabis and Saturday brands, while expanding our medical footprint through our Starseed portfolio. This includes an aggressive plan to transition WeedMD into a consumer-facing model of excellence. Ultimately becoming hyper-focused on driving meaningful results, while optimizing the organization for future success to deliver shareholder value,” George Scorsis commented.

The Saturday-branded vapes are produced at WeedMD’s extraction hub in Aylmer, Ontario and  join its line of Color Cannabis.

The debut comes after WeedMD began selling Black Sugar Rose to the Ontario Cannabis Store for adult-use earlier in December. WeedMD is the first cultivar to carry a terpene profile listing.  Black Sugar Rose is an indica-dominant hybrid whose whole flower product is currently available with a terpene profile of 3.6 per cent and THC level of 20 per cent.

Scorsis: “With Black Sugar Rose, we wanted to respond to the call for new cultivars, flower integrity, greater product diversity while responding to consumers’ request for less packaging.  Selling the product is just another way WeedMD is enhancing its appeal and accommodating an ever-evolving, national consumer base.”

Curtis Wallace, Head of Cultivation at WeedMD, added, “Cultivating and releasing Black Sugar Rose in Ontario is a proud achievement and pays homage to WeedMD’s cultivation pedigree and tradition for excellence.”

Terpenes are natural organic compounds that exist in all plants found in nature, including cannabis. They play a key role in aroma and flavour of individual cultivars and can be consumed in combination with cannabinoids.

WeedMD also made the decision to display total terpenes on its packaging at a time when cannabis users, and those who are new to cannabis, are looking for more information.

In an interview, Curtis Wallace said: “We now share full visibility on total terpenes, just like cannabinoids. Consumers and patients that are purchasing Color and Starseed flowers will value this new data point. From our perspective, a flower’s total terpene percentage is another number that matters, and knowledge is power.”

As WeedMD progresses into its next stages, George Scorsis will continue to work closely with the team to enhance customer experience, broaden distribution and work to increase sales on a national level.

 

Truss CBD USA, A HEXO Corp & Molson Coors Joint Venture, Launches Veryvell Sparkling CBD Water In Colorado

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CANADA:  Truss CBD USA, a joint venture between HEXO Corp and Molson Coors Beverage Company, today announced the U.S. launch of VeryvellTM, a new line of non-alcoholic, sparkling CBD beverages, exclusively available in Colorado.

VeryvellTM is a hemp-derived, adaptogenic, sparkling CBD water now available to Colorado-based consumers in three flavours: Focus (Grapefruit Tarragon), Mind & Body (Strawberry Hibiscus) and Unwind (Blueberry Lavender). VeryvellTM is Powered by HEXOTM, the recognized quality and innovation behind award-winning products.

“We are excited to launch VeryvellTM in Colorado through Truss CBD USA, in collaboration with our partner, Molson Coors. Our joint venture with Molson Coors Canada saw Truss Beverage Brands become the number one choice for consumers in Canada and we are expecting similarly great results in the US.” said HEXO CEO and co-founder Sebastien St-Louis. “We have near-term plans to invest additional capital in the USA to support Truss CBD USA and to further execute on our Powered by HEXOTM strategy with other potential CPG partners, outside of beverages, with whom we are currently in ongoing negotiations.”

VeryvellTM is produced and distributed within Colorado state lines following the state’s established regulatory framework for hemp-derived CBD in food and beverages and is exclusively distributed by Coors Distributing Company. Truss CBD USA is distinct from Truss Beverages, Molson Coors and HEXO’s joint venture in Canada that focuses on non-alcoholic, cannabis-infused beverages.

IM Cannabis to Acquire Trichome In Landmark Transaction

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Establishes Global Growth Platform & Leading Multi-Country Operator

CANADA / ISRAEL:  IM Cannabis Corp., a multi-country operator in the medical cannabis sector with operations in Israel and across Europe, and Trichome Financial Corp., announced that they have entered into a definitive agreement to combine their businesses into a global leader in adult-use recreational and medical cannabis pursuant to a plan of arrangement to be completed under the Business Corporations Act. Following completion of the Transaction, the Combined Company will maintain offices in Glil Yam, Israel and Toronto, Canada, and will operate under the IM Cannabis Corp. corporate name with common shares trading on the Canadian Securities Exchange under the ticker symbol “IMCC.” The Company remains on track to finalize its listing on the NASDAQ Capital Market in Q1 2021.

The Combined Company is expected to be a global cannabis production and distribution leader with increasing revenue in Israel and Germany’s medical cannabis markets under the IMC brand, and in Canada’s adult-use recreational market through Trichome’s wholly-owned subsidiary, Trichome JWC Acquisition Corp. The Combined Company is anticipated to benefit from each team’s cross-functional brand-building and distribution expertise, which is expected to enable the Combined Company to immediately begin planning for a roll-out of JWC products in Israel and the EU. Both management teams share a prudent operating philosophy that is grounded in finding low capital, high return projects, and a focus on free cash flow generation. Strategically, there is a common goal of continuing an aggressive, synergistic and accretive acquisition strategy in North America. With continued revenue growth in all operating regions expected throughout 2021 and by maintaining a disciplined and lean cost structure, the Combined Company is forecast to be adjusted EBITDA positive in 2021.

Health Canada Releases New Data On Cannabis Use In Canada

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CANADA:  Health Canada published the results of its 2020 Canadian Cannabis Survey. Results of the survey provide a snapshot of Canadians’ knowledge, attitudes and behaviours towards cannabis and its use. Data were collected from April 30 to June 22, 2020.

The survey results will help to evaluate the impact of the Cannabis Act and inform policy and program development, and public education and awareness activities. This important research complements data collected through Health Canada’s national drug surveillance surveys—the Canadian Tobacco, Alcohol and Drugs Survey and the Canadian Student Tobacco, Alcohol and Drugs Survey.

Key findings show that:

  • More than half of those who use cannabis, report using it three days a month or less. 54% reported using cannabis three days per month or less, while 18% reported daily cannabis use. Responses were unchanged from 2019.
  • More than half of those who use cannabis choose to obtain it through a legal source. 41% reported legal storefront as their usual source, an increase from 24% in 2019, whereas 13% reported obtaining cannabis from a legal online source.
  • The COVID-19 pandemic has had some impacts on cannabis use. People who used cannabis in the past 12 months were asked if their cannabis use had changed due the pandemic—56% reported using the same amount, while 22% reported using more and 22% reported using less.
  • Smoking remains the most common method of consuming cannabis, but it has declined while eating cannabis products has increased since 2019.
  • Almost 8 in 10 Canadians feel they have access to trustworthy information to make informed decisions about their cannabis use. An increase from 71% in 2019 to 77% in 2020. Information about the health risks associated with cannabis use is widely available and reaching Canadians.
  • Driving after cannabis use has decreased among those who reported past 12-month cannabis use, as compared to 2019 results. 22% of those who use cannabis drove within two hours of smoking or vapourizing cannabis in their lifetime and 13% reported driving within four hours of orally ingesting cannabis in their lifetime.
  • The federal government will continue to conduct research and share the results with Canadians, public health officials, provinces and territories, and other stakeholders.

Aphria And Tilray Combine To Create Largest Global Cannabis Company With Pro Forma Revenue Of C$874 Million (US$685 Million)

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Complementary, Scalable Medical and Adult-Use Cannabis Businesses Strengthen Leadership Position in Canada; Expands U.S. and International Reach through World-Class Cultivation, Manufacturing, Diversified Product Portfolio and Distribution Footprint

CANADA: Aphria Inc., a leading global cannabis company inspiring and empowering the worldwide community to live their very best life, and Tilray, Inc. , a global pioneer in cannabis research, cultivation, production and distribution, today announced that they have entered into a definitive agreement to combine their businesses and create the world’s largest global cannabis company based on pro forma revenue1. The deal is pursuant to a plan of arrangement under the Business Corporations Act (Ontario), and the implied pro forma equity value of the Combined Company is approximately C$5.0 billion (US$3.9 billion), based on the share price of Aphria and Tilray at the close of market on December 15, 2020. Following the completion of the Arrangement, the Combined Company will have principal offices in the United States (New York and Seattle), Canada (Toronto, Leamington and Vancouver Island), Portugal and Germany, and it will operate under the Tilray corporate name with shares trading on NASDAQ under ticker symbol “TLRY”.

The Combined Company, supported by low-cost, state-of-the-art cultivation, processing, and manufacturing facilities, will have a complete portfolio of branded Cannabis 2.0 products in Canada. Internationally, the Combined Company will be well-positioned to pursue growth opportunities with Aphria’s medical cannabis and distribution footprint in Germany, and Tilray’s European Union Good Manufacturing Practices low-cost cannabis production facility in Portugal, which has export capabilities and tariff-free access to the European Union to meet increasing global demand for medical cannabis. In the United States, the Combined Company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater Brewing Company, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a leading hemp food manufacturer and a pioneer in branded CBD and wellness products. The Combined Company is expected to have a strong, flexible balance sheet, cash balance and access to capital giving it the ability to accelerate growth and deliver attractive returns for stockholders.

Under the terms of the Arrangement, the shareholders of Aphria will receive 0.8381 shares of Tilray for each Aphria common share, while holders of Tilray shares will continue to hold their Tilray shares with no adjustment to their holdings. Upon the completion of the Arrangement, Aphria Shareholders will own approximately 62 percent of the outstanding Tilray Shares on a fully diluted basis, resulting in a reverse acquisition of Tilray, representing a premium of 23 percent based on the share price at market close on December 15, 2020 to Tilray shareholders. On a pro forma basis for the last twelve months reported by each company, the Combined Company would have had revenue of C$874 million (US$685 million).

Proven Leadership Team

The Combined Company will be led by a best-in-class management team and board of directors, with strong track records in consumer-packaged goods and cannabis experience internationally. Upon completion of the Arrangement, Aphria’s current Chairman and Chief Executive Officer, Irwin D. Simon, will lead the Combined Company as Chairman and Chief Executive Officer. The board of directors will consist of nine members, seven of which, including Mr. Simon, are current Aphria directors and two of which will be from Tilray, including Brendan Kennedy, and one of which is to be designated. Aphria and Tilray are confident that the leadership team and proposed board of directors of the Combined Company provides a strong foundation for the Combined Company to accelerate growth. Additional senior leadership positions at the Combined Company will be named at a later date.

“This is an exciting day for both companies including our 2,500 employees, for the cannabis industry, and for patients and consumers around the world. We are bringing together two world-class companies that share a culture of innovation, brand development and cultivation to enhance our Canadian, U.S., and international scale as we pursue opportunities for accelerated growth with the strength and flexibility of our balance sheet and access to capital,” said Mr. Simon. “Our highly complementary businesses create a combined company with a leading branded product portfolio, including the most comprehensive Cannabis 2.0 product offerings for patients and consumers, along with significant synergies across our operations in Canada, Europe and the United States. Our business combination with Tilray aligns with our strategic focus and emphasis on our highest return priorities as we strive to generate value for all stakeholders.”

“I am honored to work with Brendan Kennedy, a pioneer in the cannabis industry, and the Tilray team as they join forces with our talented employees at Aphria,” continued Mr. Simon. “I look forward to leading the talented teams of both Aphria and Tilray as we seek to create a leading global cannabis and consumer packaged goods company with a portfolio of medical, wellness and adult-use brands consumers love.”

Mr. Kennedy, Tilray’s Chief Executive Officer, commented, “We are thrilled to bring together two cannabis industry leaders. At this nascent stage of development and expansion of the global cannabis market, we believe companies with leading geographic scale, product range and brand expertise are most likely to benefit long-term. By leveraging our combined strengths and capabilities, we expect to be able to meet the needs of consumers more effectively all over the world and advance patient care. With a strong financial profile, low-cost production, leading brands, distribution network and unique partnerships, we believe the Combined Company will be well-positioned to deliver sustainable, attractive returns for stockholders. I look forward to working with Irwin and the Combined Company’s management team to make our consumer products more accessible around the world.”

Strategic and Financial Benefits

The Combined Company will be the largest global cannabis company based on pro forma revenue for the last twelve months reported by each company with scale and breadth across major geographies and a complete portfolio of market leading brands in the major Cannabis 2.0 product categories. Aphria and Tilray each believe the business combination pursuant to the Arrangement will provide the following financial and strategic benefits, among others:

Financial Strength and Flexibility: The Combined Company will enjoy an attractive financial profile with pro forma revenue of C$874 million (US$685 million) for the last twelve months reported by each company, the highest in the global cannabis industry. In Canada, the combination of Aphria and Tilray will create the leading adult-use cannabis company with gross revenue of C$296 million (US$232 million) in the adult-use market for the twelve months reported by each company. Aphria has generated positive adjusted EBITDA over the last six quarters2, which in combination with the synergies to be realized, provides a robust platform for future profitability and cash flow generation for the Combined Company. This, collectively with the strength of the Combined Company’s balance sheet and access to capital, is expected to help accelerate global growth and value for the Combined Company’s stakeholders.

Creates the Leading Canadian Adult-Use Cannabis Licensed Producer: Together, Aphria and Tilray will be the leading adult-use cannabis Canadian Licensed Producer based on revenue for the last twelve months by combining their respective brands, distribution networks and world-class facilities. In Canada’s C$3.1 billion adult-use, retail market3, the Combined Company will have one of the lowest cost production operations with its state-of-the-art facilities. In addition, the Combined Company will have a portfolio of carefully curated brands across all consumer segments that are sold through its distribution partners. On a pro forma basis, for the period August to October 2020, the Combined Company would have held a 17.3% retail market share4, the largest share held by any single Licensed Producer in Canada and 700 basis points higher than the next closest competitor.

Increases Product Breadth and Commitment to Innovation: Leveraging both Aphria and Tilray’s commitment and culture of innovation and brand building, the Combined Company will serve clients with a complete portfolio of Cannabis 2.0 products and sales and service infrastructure supported by leading distribution partners. Aphria and Tilray’s complementary brands will be available across economy, value, core, premium and premium plus product offerings. In addition, the Combined Company will have a complete breadth of products in every major cannabis category, including flower, pre-roll, oils, capsules, vapes, edibles and beverages.

Establishes an Unrivaled European Platform: The Combined Company will be well-positioned to pursue growth opportunities with its end-to-end EU-GMP supply chain and distribution, which includes Aphria’s German medical cannabis distribution footprint and Tilray’s 2.7 million square foot European EU-GMP low-cost cannabis cultivation and production facility in Portugal. In Germany, Aphria’s wholly-owned subsidiary, CC Pharma GmbH, will provide the Combined Company with distribution capabilities for the Aphria and Tilray medical cannabis brands to more than 13,000 pharmacies. In Portugal, Tilray’s EU-GMP cultivation and production facility will provide the Combined Company with the capacity to cultivate and produce medical cannabis products in order to meet international demand and has export capabilities, which provides tariff-free access to the EU.

Enhances Consumer Packaged Goods Presence and Infrastructure in the U.S.: In the United States, the Combined Company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater, a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a pioneer in branded hemp, CBD and wellness products with access to 17,000 stores in North America. The Combined Company is expected to leverage SweetWater’s craft beer manufacturing and distribution network to build brand awareness for the Combined Company’s leading brands via craft beers, hard seltzers, and other beverages as it seeks to take advantage of opportunities for both the adult-use and health and wellbeing beverage trends. The Combined Company also expects to pursue the opportunity to expand with new or existing CBD or other cannabinoid brands leveraging Manitoba Harvest’s strong hemp and wellness product platform. When U.S. regulations allow, the Combined Company expects to be well-positioned to compete in the U.S. cannabis market given its existing strong brands and distribution system in addition to its track record of growth in consumer-packaged goods and cannabis.

Positions Combined Company to Continue to Grow in the Beverage Segment: The Combined Company believes it will be well-positioned to pursue an accelerated rate of growth in the Canadian and the U.S. beverage industries by leveraging SweetWater’s innovation, knowledge, and expertise to introduce adult-use cannabis brands via craft beers and other beverages. This includes leveraging Aphria and Tilray’s proven distribution networks in Canada to sell SweetWater’s 420 cannabis lifestyle brand in Canada.

Substantial Synergies: The combination of Aphria and Tilray is expected to deliver approximately C$100 million of annual pre-tax cost synergies within 24 months of the completion of the transaction. The Combined Company expects to achieve cost synergies in the key areas of cultivation and production, cannabis and product purchasing, sales and marketing and corporate expenses. This is expected to include the opportunity for Aphria’s Leamington, Ontario operations to provide additional volume for Tilray’s brands and to replace the need for Tilray to use wholesale cannabis purchases from other licensed producers. Tilray’s London, Ontario facility will also provide Aphria with excess capacity to increase production of additional form factors including their branded edibles and beverages. The Combined Company is considering utilizing Tilray’s existing Nanaimo, British Columbia facility for Aphria’s premium Broken Coast brand to increasingly meet consumer demand for its products. The Combined Company plans to capitalize on opportunities for growth through a broadened product offering and additional form factors, with the aim of increasing adult-use cannabis brand availability across certain Canadian provinces to an expanded customer base with the Combined Company’s scalable infrastructure. Internationally, the Combined Company will have the opportunity to reach additional pharmacies and patients via distribution relationships. The combination is expected to unlock significant shareholder value.

Agreement Details

Under the terms of the Agreement, the Arrangement will be carried out by way of a court approved plan of arrangement under the Business Corporations Act (Ontario) and will require the approval of at least two-thirds of the votes cast by the Aphria Shareholders at a special meeting. Approval of a majority of the votes cast by Tilray stockholders will be required to, among other things contemplated by the Agreement, authorize the issuance of Tilray shares to Aphria shareholders pursuant to the Arrangement. Following completion of the Arrangement, Aphria will become a wholly-owned subsidiary of Tilray, with Aphria shareholders owning approximately 62 percent of Tilray.

Completion of the Arrangement is subject to regulatory and court approvals and other customary closing conditions. Regulatory approvals expected to be required include Competition Bureau (Canada), U.S. HSR and Germany FDI. The Agreement includes certain reciprocal customary provisions, including covenants in respect of the non-solicitation of alternative transactions, a right to match superior proposals and C$65 million (US$50 million) reciprocal termination fee payable under certain circumstances. The Arrangement is expected to close in the second quarter of calendar year 2021 following the receipt of such regulatory approvals, as well as court approval of the Arrangement.

Each of Aphria’s and Tilray’s respective directors and officers and certain principal Tilray Stockholders have entered into voting support agreements agreeing to vote their Aphria Shares or Tilray Shares, as applicable, in favor of the resolutions put before them pursuant to the Agreement.

For further information on the terms and conditions of the Arrangement, please refer to the Agreement in its entirety, which will be available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Full details of the Arrangement will be included in a management information circular of Aphria and in a proxy statement of Tilray to be delivered to Aphria Shareholders and the Tilray Stockholders, respectively, in the coming weeks.

Board of Directors’ Approval

Each of Aphria’s and Tilray’s respective board of directors has unanimously approved the Agreement and the Arrangement. Jefferies LLC provided a fairness opinion to the Board of Directors of Aphria on December 15, 2020, stating that, as of the date of such opinion and based upon the scope of review and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to the Aphria Shareholders. Cowen provided a fairness opinion dated December 15, 2020 to the board of directors of Tilray stating that, as of the date of such opinion and based upon and subject to the assumptions, limitations and qualifications stated in such opinion, the Exchange Ratio is fair, from a financial point of view, to Tilray.

Advisors

Jefferies LLC is serving as financial advisor and DLA Piper LLP (US), DLA Piper (Canada) LLP and Fasken Martineau Dumoulin LLP are acting as legal counsel to Aphria. Cowen is serving as financial advisor and Cooley LLP and Blake, Cassels and Graydon LLP are acting as legal counsel to Tilray.

Conference Call & Webcast Presentation

Aphria and Tilray executives will host a conference call and webcast with a supplemental presentation to discuss the strategic business combination today, December 16, 2020 at 8:30 a.m. Eastern Time.

To listen to the live call, dial (647) 427-7450 from Canada and the U.S. or (888) 231-8191 from international locations and use the passcode 4334816. A telephone replay will be available approximately two hours after the call concludes through January 13, 2021. To access the recording dial (855) 859-2056 and use the passcode 4334816.

There will also be a simultaneous, live webcast and supplemental presentation available on the Investors section of Aphria’s and Tilray’s website at aphriainc.com and Tilray.com. The webcast will be archived for 30 days.

We Have A Good Thing Growing

Canopy Growth Announces Changes To Canadian Operations

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CANADA:  Canopy Growth Corporation announced a series of Canadian operational changes designed to streamline its operations and further improve margins.

Canopy Growth will cease operations at the following sites: St. John’s, Newfoundland and Labrador; Fredericton, New Brunswick; Edmonton, Alberta; Bowmanville, Ontario; as well as its outdoor cannabis grow operations in Saskatchewan. Approximately 220 employees have been impacted as a result of these closures.

“As part of the end-to-end review of our operations that we outlined during our second-quarter earnings call, we have made the decision to close a number of our production facilities. These actions will be an important step towards achieving our targeted $150-$200MM of cost savings and accelerating our path to profitability. We are confident that our remaining sites will be able to produce the quantity and quality of cannabis required to meet current and future demand,” said David Klein, CEO, Canopy Growth. “This was a difficult decision but I believe it is the right one. I want to thank all of the employees impacted by this decision for their efforts in helping build Canopy Growth.”

These decisions are the partial outcome of an ongoing end-to-end review designed to improve the Company’s margins. The end-to-end review was announced during the Company’s Q2 earnings call and looks at people, process, technology, and infrastructure. The Company expects to record estimated total pre-tax charges of approximately $350-400MM in the third and fourth quarters of Fiscal 2021.

The production sites impacted represent approximately 17% of the Company’s enclosed Canadian footprint and 100% of its Canadian outdoor production footprint.

All figures reported above with respect to the third and fourth quarters of Fiscal 2021 are preliminary and are unaudited and subject to change and adjustment as the Company prepares its quarterly and annual financial statements.

 

The People’s Alliance Of Cannabis In Canada Brings Support, Services & Standards To The Growing Industry

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CANADA: “We are concerned with setting standards for the cannabis industry in Canada that will not only demonstrate our united strength, but also give countries across the world something to emulate as they pursue federal legalization as well,” said Anne-Marie Fischer, M.Ed., the President of the newly launched People’s Alliance of Cannabis in Canada (PACC).

The People’s Alliance of Cannabis in Canada, known as PACC, launched today on the second anniversary of cannabis legalization in Canada. PACC represents the interests of professionals and consumers within the growing cannabis space across the nation. They provide support through crucial programming, develop professional standards for the industry to emulate, encourage the unification of all cannabis markets, and create a standard for education across cannabis in our country.

PACC operates and advocates for legislative change so that we create a cannabis industry where cannabis is always safely accessed, and provided by cultivators and producers who meet a set of defined professional standards.

“We came together in spring of this year because we were all frustrated about some of the things that were happening in the cannabis industry,” says Fischer, Founder and CEO of CannaWrite, “We saw that people were losing their jobs, that harassment and discrimination was a big problem, and that there were certain divides between markets that were preventing a united front for the progression of the plant.”

The People’s Alliance of Cannabis in Canada has 6 focus areas that are led by one of the founding members, and supported by an Advisory Team of cannabis professionals, advocates, and consumers that have been carefully chosen to represent their part of cannabis. These focus areas are:

Medical Cannabis

Recreational/Retail

Black, Indigenous, and People of Colour (BIPOC) in Cannabis

Hemp and Agriculture

Legacy Market

Cannabis Advocacy

Each Focus Area will work to develop professional standards, educational resources, and a path towards advocacy in their area of passion.

In addition to the Focus Areas, PACC will have several service areas that aim to provide support, benefits, and methods of recourse for disputes:

Group Medical Benefits

Legal Support

Alternative Dispute Resolution (ADR)

Human Resources Standards/Best Practices

Harassment & Discrimination Reporting & Support

“The Founding Members of PACC all have professional backgrounds, and experiences, that we would like to see brought into this industry,” says Fischer, “By putting our skills, background, and knowledge of business, human resources, group benefits, and legal standards together, we hope that the people of cannabis feel they have somewhere to go, where they feel taken care of in all aspects of their lives”. The People’s Alliance of Cannabis in Canada will unveil its membership program, that gives professionals in cannabis access to the above services, in mid-2021.

At present, PACC is working on establishing its Advisory Team and Working Groups, at which time the organization will move forward with establishing bylaws, terms and conditions, and objectives of PACC for the remainder of this year, and the year ahead.

Joining Fischer within the Founding Board is Vice President Kelly Addison, of Kelly’s Green Lounge, Michelle Parrotta of Mimi Cannabis, Khadisha Thornhill of Afro Cannada Bud Sistas, and Stacy Bobak of Cannadent.ca. “It’s been a passionate project for us all,” says Fischer, “We’ve been working every week together to move this forward. We genuinely hope this organization is a success that is supported by many.”

To learn more about The People’s Alliance of Cannabis in Canada, visit www.peoplescannabis.ca, or follow the organization on Instagram at @peoplescannabiscanada or Facebook at www.facebook.com/peoplescannacanada

“Men Of Cannabis” Calendar Highlights Diversity In Growing Canadian Industry 

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CANADA: “Of all the projects I have been involved in, the Men of Cannabis calendar is the most important one I’ve been involved with so far,” says Reverend Kelly Addison, founder of Orono’s Kelly’s Green Lounge, “I am pretty sure it was some divine intervention that helped this all come together so perfectly,” she says of the soon-to-be-released cannabis-friendly calendar that Kelly hopes will grace the walls of cannabis professionals and consumers alike for the 2021 calendar year.

Reverend Kelly Addison is the founder and managing director at Kelly’s Green Lounge, a cannabis-friendly establishment. Located in Orono, Ontario, Kelly’s Green Lounge is a centre for community, education, and celebration of the cannabis plant. While the Ontario legislation does not yet permit indoor consumption in “cannabis lounges”, the smoke-free lounge offers a number of on-site and online programming for personal development, cultivation, and building of community in cannabis. The calendar is a celebration of the community that has been built around Kelly’s Green Lounge.

Shot over the summer months, and artistically designed and photographed by Jeff Buchanan and his partner Black Gypsy, the Men of Cannabis calendar is not just a timepiece, but a piece of art. Some of Canada’s most influential men of cannabis have come together to share their passions, and their visual aesthetics to the Canadian cannabis community.

“Every single one of these men are beautiful,” Kelly remarks, “The men in this calendar show that cannabis doesn’t discriminate. We have men from their twenties up to their sixties, we have men of different sexual orientations, men of different cannabis career paths, and men of all backgrounds, religion, and ethnicities representing the greater contributions of the men of the industry in this one piece of art.”The calendar is styled after the iconic “Last Supper” painting by Leonardo DaVinci, with Reverend Kelly at the centre, surrounded by twelve men in poses that imitate the famous tableau. The choice of this spiritual spread was intentional, as Kelly’s approach embraces the spirituality of the plant, cannabis as our goddess, believing that cannabis is the embodiment of what anyone’s chosen deity wants for the world. Having Kelly at the centre of this photo, surrounded by the men of cannabis is a representation of the divine and central place the female has in the cannabis world.

The calendar is available for pre-order at www.kellysgreenlounge.ca, with full online sales beginning October 17, 2020

Each month of the 2021 year will feature a different man of cannabis, each chosen to represent their chosen path in the industry. From “Mister January”, Rich Prince who embodies Jamaican/Rhastafarian culture; to “Mister June”, Count Klassy, the charting LGBTQ musical artist proudly wearing the pride flag; to healer and “Cannawitch” Sean Black as “Mister October”; to ending the year with a surprise “tasty treat” from Baker John, also known as Baked on High Guy, this calendar represents all men, and all paths taken in the name of the mighty flower.We asked Kelly why she chose to feature the men of cannabis as her first iteration of the annual calendar project.

“We’re lucky to be able to say that cannabis in Canada is quickly being conquered by females,” says Kelly, “The plant herself is female, the numbers of female CEOs and leaders in cannabis is increasing, and that equals a lot of female energy within our industry, and rightfully so,” she goes on, “We didn’t want to lose sight on the beautiful men of this industry who are both advocates for the plant, and true exemplars of humans, who are fighting for equity for all people within the growing industry.”

The calendar had it’s “soft launch” on October 2, with a safe and socially-distanced celebration of “Danksgiving” at Kelly’s Green Lounge.   To Pre-Order :  lisamarie@kellysgreenlounge.ca