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Cronos Inks $30 Million Supply Agreement with Medipharm

ME Staff

Cronos Group Inc (NASDAQ:CRON) through its subsidiary Peace Naturals Project, has signed a multi-year supply agreement with Medipharm, an affiliate of Medipharm Labs Corp (OTCMKTS:MEDIF) on May 13, 2019. Under the terms of the agreement, Medipharm Labs will supply Peace Naturals $30 million worth of high-grade private label cannabis concentrate for over 18 months. The agreement is subject to mutual renewal and purchase options totaling up to $60 million for a 2-year period.

Bulk Resin Supply Agreement

The agreement dubbed “Bulk Resin Supply Agreement” grants Peace Naturals the right of first offer for additional cannabis concentrate of $18 million. The contractual right to first offer is subject to supply availability from Medipharm. The mutual extension option provides that Peace Naturals purchases additional supply for about $6 million over a period of 6 months and another right of first offer to purchase an extra $6 million worth of supply valuing the whole agreement at $60 million.

Bulk Resin Supply Agreement

Aside from the multi-million supply agreement, the two partners inked yet another deal involving processing of dried cannabis. In the second deal titled “Cannabis Concentrate Program Agreement,” Cronos Group picked Medipharm Lab’s state-of-the-art extraction facility located in Barrie, Ontario to handle the bulk processing of its dried cannabis. Cronos group endeavors to supply Medipharm with dried cannabis in bulk for processing. The new agreement will be billed separately from the supply agreement in a 2-year term tolling agreement.                                                                                                                                                                                                                                          Commenting on the new deal, Medipharm Lab’s Chief Executive Officer, Patrick McCutcheon said that “With the continued evolution of the Canadian cannabis industry, we are excited to partner with Cronos Group in their journey to launch new products and secure MediPharm Labs’ high-quality private label supply of concentrates.”

He further pledged his company’s support in terms of specialized extraction assets, and expertise in order for Cronos to meet the burgeoning market demands. Cronos Group CEO, Mie Gorenstein on his part expressed delight in working with Medipharm Labs in their mission to develop high quality cannabis products ahead of the Canadian derivative market launch this fall.

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