Hydropothecary signs 5-year preferred supplier agreement with SAQ, for an estimated volume of 200,000kg

Hydropothecary signs 5-year preferred supplier agreement with SAQ, for an estimated volume of 200,000kg
Hydropothecary signs 5-year preferred supplier agreement with SAQ, for an estimated volume of 200,000kg

  • Hydropothecary becomes preferred supplier to Quebec market for a five-year term.
  • Total volume estimated at more than 200,000kg over five-year term
  • Option to extend term for an additional year.
  • Largest supply agreement between an authorized producer and a provincial authority responsible for the supply of cannabis for the adult-use recreational market.

The Hydropothecary Corporation (TSXV:THCX) is pleased to announce that it has entered into a commercial agreement with the Société des alcools du Québec (SAQ) to be the preferred supplier of cannabis products for the Quebec market for the first five years post-legalization, with an option to extend the term for an additional year.

Under the agreement, Hydropothecary will supply 20,000 kg of products in the first year of the agreement and is expected to supply 35,000 kg in the second year and 45,000 kg in the third. The volumes for the final two years of the agreement will be established at a later date based on the sales generated in the first three years. The supply arrangement covers the full range of the Company’s products and brands, from flowers to cannabis oil.

In the event the volume requirements in years four and five of the agreement amount to 49,500 kg and 54,450 kg respectively based on an anticipated 10% growth rate in both the cannabis market and the Company’s supply requirements under the agreement, and assuming the mix of products supplied moves towards less flower and more value-added products as anticipated, the Company estimates the total volume to be supplied over the five-year term of the agreement could exceed 203,950kg. 

The SAQ has the right to terminate the agreement in certain circumstances.

“Becoming the preferred supplier to the Quebec market out of the gate post legalization is a source of great pride and a vote of confidence in our ability to scale operations to meet our supply commitment,” said Sébastien St-Louis, co-founder and CEO of Hydropothecary. “This agreement marks an important step in the execution of our growth strategy, which is focused initially on the Quebec market by expanding our Gatineau facilities and hiring new employees, and then establishing our presence in other Canadian markets.”

“By doing business with Hydropothecary, the SAQ is engaging with a company that complies with the law and adheres to best practices in both corporate governance and the development and manufacturing of high quality and safe products,” added Mr. St-Louis.

Recognizing its responsibility toward Quebec and its citizens, Hydropothecary is committed to: 
  • working with the Government of Quebec, the future Société québécoise du cannabis (SQDC), a subsidiary of the SAQ and other partners to implement awareness campaigns promoting responsible cannabis use; and,
  • supporting research and educational programs related to the cultivation and processing of cannabis, as well as the development of medical and recreational cannabis products in Quebec.

Hydropothecary is currently the only cannabis producer in Quebec to hold a license from Health Canada for the sale of cannabis.

The agreement is conditional on the adoption by the federal and provincial governments of the necessary regulatory framework.

Conference call

Hydropothecary will host a conference call for financial analysts and shareholders to discuss the SAQ supply agreement today at 8:30 am EST. The dial-in number is 1-(866) 521-4909, access code is 1776268. A replay of this call will be available afterward on our website www.thcx.com.

About The Hydropothecary Corporation

The Hydropothecary Corporation is an authorized licensed producer and distributor of medical cannabis licensed by Health Canada under the Access to Cannabis for Medical Purposes Regulations. Hydropothecary creates award-winning innovative, easy to use and easy to understand products. Hydropothecary is rapidly increasing its production capacity in the lead-up to recreational adult-use cannabis. Expansion plans will result in a total of 1.3 million sq. ft. of production space, producing 108,000 kg of dried cannabis per year, making Hydropothecary one of the largest producers in the country. Headquartered in Quebec, Hydropothecary is one of the lowest-cost producers in the country.

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