Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX:WEED, NYSE:CGC) and MediPharm Labs Inc. (“MediPharm”), a specialized cannabis extraction business licensed under the Cannabis Act, and a wholly owned subsidiary of MediPharm Labs Corp. (TSXV:LABS) (together, the “Companies”) have entered into a strategic supply agreement dated November 29, 2018.
Under the 18-month agreement, MediPharm will supply up to 900kg of cannabis extract for sale to Canopy Growth and its subsidiaries. Canopy Growth has committed to purchasing a minimum of 450kg with an option to purchase an additional 450kg.
“As the industry matures we are seeing exciting businesses like MediPharm establish specialized skill sets that will drive the industry forward. Extraction is now and will continue to be an opportunity to develop expertise and IP,” said Bruce Linton, Chairman & Co-CEO, Canopy Growth. “We continue to develop our own capacity in this area and are pleased to work with MediPharm, a leading team that has demonstrated it shares this vision.”
Management of both Companies agree that today’s announcement demonstrates a meaningful increase in total supply in the market and continue to believe that licensed capacity across Canada is capable of meeting the needs of the Canadian recreational and medical markets. This agreement will establish an early-mover advantage for both Companies to meet an immediate and unmet need across the country for value-add products such as Softgels.
“We are thrilled to work with Canopy Growth, the world’s leading cannabis producer, to deliver the highest quality cannabis oil concentrates for medical patients and recreational consumers,” said Pat McCutcheon, MediPharm Labs, President and Chief Executive Officer. “This sales agreement serves as a strong endorsement of MediPharm’s industry leading extraction-only business model.”
The ability to concentrate and stabilize cannabinoids in extract adds stability to the supply chain and increases options on future supply fluctuation as consumer preferences evolve. This is a nimble model that benefits both parties and Canadian consumers. As MediPharm finalizes its GMP certification, Canopy Growth will explore export opportunities as a part of this strategic agreement.
Here’s to Future Growth.