NAMASTE ANNOUNCES SHARE PURCHASE AND MEDICAL CANNABIS LICENSED DEALER APPLICATION LETTER OF INTENT WITH 2624078 ONTARIO INC.
Namaste Technologies Inc. has signed a non-binding letter of intent with 2624078 Ontario Inc., whereby Namaste would acquire 51 per cent of the share capital of 2624078 Ontario Inc., which will undertake an application to become a licensed dealer of medical cannabis, in accordance with Health Canada regulations. Licensed dealers are authorized to perform research and development, analytical testing and conducting clinical studies with medical cannabis, as well as importing medical cannabis for research purposes. The location for the licensed dealer facility is at 7 Canso Rd. in Etobicoke, Ont., and directly across the street from the Access to Cannabis for Medical Purposes (ACMPR) facility of Namaste's wholly owned subsidiary, Cannmart Inc. The purpose of Namaste's investment and partnership with 2624078 Ontario is to facilitate research and development of medical cannabis extracts as well as for testing of imported medical cannabis products in accordance with ACMPR guidelines. Namaste's partnership with 2624078 Ontario reinforces Namaste's position as a leader in the medical cannabis industry and helps ensure that it will be a first mover in the research and production of cannabis concentrates as it anticipates a growing demand for extracts in the future.
Key terms of the letter of intent:
Namaste will acquire 51 per cent of the share capital of 2624078 Ontario.
Namaste and will provide debt financing of up to $750,000 to complete construction of the licensed dealer facility.
2624078 Ontario's existing management team will sign three-year management agreements to provide operational oversight of the facility.
Both parties will have 30 days from the date of execution of the letter of intent to negotiate terms of definitive documentation, which will include a share purchase agreement and management agreements.
The facility at 7 Canso Rd. will be constructed to meet ACMPR standards.
The letter of intent and proposed share purchase agreement represent a significant milestone for Namaste in securing a facility that will facilitate the importation of unique strains of medical cannabis for testing purposes, as well as research and production of high-potency cannabis extracts. If a licensed dealer licence is obtained, Namaste will be able to import medical cannabis from international partners for the purpose of testing the product against ACMPR standards. In addition to providing the ability to import medical cannabis for research purposes, the licensed dealer licence would also allow Namaste to begin research and development of medical cannabis extracts. Currently, the company estimates that cannabis extract sales in the United States represent over 50 per cent of all dispensary sales. As Namaste anticipates further expansion of Canada's legal medical cannabis platform, it expects to see significant industry trends toward these higher potency products. This letter of intent and the implications of obtaining a licensed dealer licence for Namaste would ensure the company's position in what it expects to become a strong segment of the Canadian medical cannabis industry in the future.
Management commentary
Daniel Stern, president and chief executive officer of 2624078 Ontario, commented: "We are very excited to be working with Namaste on this project. We believe that our experience in cannabis extraction technology and many years of experience in the general cannabis industry will facilitate the success of this partnership with Namaste, who we believe is a leading innovator in the Canadian medical cannabis community."
Sean Dollinger, president and chief executive officer of Namaste, commented: "We are very pleased to have signed this letter of intent as we feel confident in the future of medical cannabis extracts in the Canadian marketplace. Although high-potency concentrates are not yet approved under ACMPR regulations, the LD licence will provide Namaste with the opportunity to take the first steps towards not only researching and producing extracts but also engage in the process of importing medical cannabis for testing purposes. The management team of 2624078 Ontario Inc. has shown confidence in Namaste's leadership abilities as demonstrated through our success in the industry to date. The launch of NamasteMD and our pending ACMPR sales licence coupled with this letter of intent and the application for an LD licence are important building blocks to solidify Namaste's position as a leader in the Canadian medical cannabis industry."
About Namaste Technologies Inc.
Namaste is the largest on-line retailer for medical cannabis delivery systems globally. Namaste distributes vaporizers and smoking accessories through 24 e-commerce sites in 20 countries, with distribution hubs located around the world. Namaste has majority market share in Europe and Australia, with operations in the United Kingdom, Canada and Germany, and it has opened new supply channels into emerging markets, including Brazil, Mexico and Chile. Namaste, through its acquisition of Cannmart, is pursuing a new revenue vertical in on-line retail of medical cannabis in the Canadian market. Namaste intends to leverage its existing database of Canadian cannabis consumers, along with its expertise in e-commerce, to create an on-line marketplace for medical cannabis patients, offering a larger variety of product and a better user experience.