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Westleaf Signs One Year $4 Million White-Label Cannabis Derivative Product Sale Agreement with an Option to Increase to $16 Million

CALGARY , July 24, 2019 /CNW/ - Westleaf Inc. (the "Company" or "Westleaf") (WL.V) (WSLFF), is pleased to announce that its subsidiary, Westleaf Labs LP, has entered into a white labeling agreement with Delta 9 (NINE.V)(VRNDF) to supply approximately $4 million of cannabis derivative products from its large-scale extraction and manufacturing facility located in Calgary , known as The Plant. Under the terms of the agreement, the contract will begin on October 1 , subject to receipt of final license approval from Health Canada, and will carry an initial term of one year, whereby Delta 9 will be required to purchase a minimum of ~$4 million of various white labelled derivative products (such products are expected to include a mix of vape pens, gel caps, tincture oil, and edibles) with an option to increase such amount up to $16 million per year.

Westleaf Cannabis Inc. (CNW Group/Westleaf Inc.)

"This is an important milestone for The Plant and for Westleaf in securing contractual revenue," noted Scott Hurd , President and CEO, Westleaf Inc. "This is the first of what we believe will be many derivative product sales and manufacturing agreements for our facility, Phase I of which is designed to process up to 65,000 kilograms of dried cannabis flower per year." Hurd added that The Plant has an additional 45,000 square feet of space available for expansion which has the potential to increase its processing capacity in excess of 1,000,000 kilograms per year. Additionally, the expansion will greatly increase its capacity to formulate and produce the next wave of cannabis derivative products such as vapes, edibles and topicals, once they are legalized later this year. 

"When looking at our suite of options for white-labeled derivative cannabis products, Westleaf stood out as the clear choice." said John Arbuthnot , President and CEO of Delta 9. "Given Westleaf's large menu of existing product formulations and distribution capabilities through their cannabis retail chain, Prairie Records, we view this agreement as positive step in expanding our Delta 9 branded product offerings and distribution footprint." 

Highlights

  • Contractual Revenue – Approximately $4 million of committed revenue stream (depending on mix of derivative products selected) expected to be received by Westleaf over the 12-month term with an option for Delta 9 to increase that amount up to $16 million per year and extend for an additional year on the same terms and conditions;

  • Retail Distribution – Given Westleaf's wholly-owned distribution channels, the Delta 9 branded white-label products are anticipated to be sold through Westleaf's chain of cannabis retail stores, Prairie Records, in addition to Delta 9's retail in Manitoba and provincial cannabis regulatory bodies across Canada; 

  • Leveraging Existing U.S. Product Formulations – The facility was designed by U.S. cannabis extraction industry leaders, XABIS, and Westleaf will leverage their existing product formulation expertise, which includes over 24 different form factors developed and over 200 individual  product SKUs produced, all of which remain exclusive to Westleaf within Canada ;

  • Multiple Revenue Streams – Westleaf plans to secure additional white-labelling and contract manufacturing agreements with other third parties in addition to producing their own suite of branded derivative products, Loon, Backstage, and General Admission.


About Westleaf Inc.

Westleaf is a Canadian cannabis company focused on cannabis brands, extraction and production of derivatives, wholly owned retail, as well as cannabis cultivation . The Company's extraction and processing facility, The Plant, will produce high quality and consistent cannabis derivatives and consumables, both for Westleaf's in-house brands as well as white label products. Westleaf's retail concept, Prairie Records, leverages the instinctual tie between recreational cannabis and music with stores operating or in development across Western Canada. The Company's Thunderchild cultivation facility is scheduled for completion at the end of this year.  

Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release

Cautionary Statements

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things, (i) retail cannabis stores that Westleaf plans to open; (ii) the construction of Westleaf's production facilities and the timing for completion of same; (iii) commencement of production at Westleaf's production facilities; (iv) the Plant providing a competitive advantage by being adaptive to consumer needs; (v) products and brands to be produced and distributed from Westleaf's production facilities and the products and services that Westleaf plans to distribute and offer; (iv) timing of provincial and federal regulatory approvals, including the Processing License; (vii) timing of legalization of certain derivative products; (viii) changes in cannabis consumption habits among Canadians; (ix) the processing and production capabilities of Westleaf's extracting and cultivation facilities; * anticipated amounts of revenue to be received under the Manufacturing Agreement; (xi) exercise of the option to purchase further derivative cannabis products under the Manufacturing Agreement; and (xii) the effective date of the Manufacturing Agreement. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: risks relating to the ability to obtain or maintain licences to retail cannabis products; review of Westleaf's production facilities by Health Canada and receipt of licences from Health Canada in respect thereof; future legislative and regulatory developments involving cannabis, including the passing of regulations regarding derivative cannabis products; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; the labour market generally and the ability to access, hire and retain employees; the ability of Westleaf's production facilities to operate and perform at peak production; general business, economic, competitive, political and social uncertainties; the satisfaction of conditions precedent under Westleaf's credit facilities; timing and completion of construction of Westleaf's production facilities and retail locations; and the delay or failure to receive board, ATB Financial or regulatory approvals, including any approvals of the TSX Venture Exchange, as applicable. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, Westleaf assume no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

Cision

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SOURCE Westleaf Inc.


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