Emblem Corp. (TSXV: EMC, OTCQX: EMMBF), 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 with Aphria Inc. (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.