It is gearing up to receive its standard processing license and kicking off full-scale commercialization this year
BevCanna Enterprises Inc () (OTCMKTS:BVNNF), a manufacturer of cannabis-infused beverages, revealed Thursday, that it is significantly expanding its manufacturing facility, in anticipation of receiving its standard processing license and initiating full-scale commercialization this year.
The Vancouver-headquartered company pointed out that after a second amended agreement on February 14, its current 5,235-square foot cannabis production premise has doubled to 10,378 square feet.
Investors sent the beverage company's shares rocketing 10.7% higher in Canada at just over C$0.46 and 11.7% over the counter at nearly US$0.40 in Tuesday afternoon trading.
READ: Mota Ventures and BevCanna Enterprises finalize joint venture to sell CBD products in Europe
John Campbell, who is the chief strategy officer at BevCanna, described the expansion as an “exciting step” for the company.
"We expect to receive our standard processing license imminently, and we're preparing to initiate full-scale production in the coming months. We've seen a fantastic consumer and industry response to the upcoming Canadian beverage market, and this development ensures that we have capacity and full product offerings to fulfil the anticipated demand," said Campbell.
Campbell noted that the “high regulatory barrier to entry” for cannabis-infused beverages is “proving difficult to surmount” for many licensed producers that want to expand their brands into the emerging category.
“Beverages are BevCanna's core expertise,” said Campbell. “BevCanna's world class bottling facility has been designed with maximum flexibility to cover a wide array of bottle sizes and form factors to allow the Company to fully serve its white label client needs."
The second amendment was struck with Naturo Group Investments Inc, and Naturo Springs Inc, a majority-owned subsidiary of Naturo Group.
In connection with the change, the company obtained an independent third-party fairness opinion from a chartered business valuator. The company and the lessor previously entered into a lease dated June 12, 2018 which was later amended on August 24, 2018.
As a result, the parties changed the lease to increase the premises by an additional 5,143 square feet, from the original 5,235 square feet, as set out in the old lease.
In exchange, BevCanna agreed to increasing the consideration paid to the lessor. It has paid an additional $600,000 in cash, and $653,400 in shares in the company at a deemed price of $0.425 per share.
The shares issued to the lessor are subject to resale restrictions imposed by law, including a statutory hold period expiring four months and one day from the date of issuance.
Joint venture to sell CBD products in Europe
Meanwhile, Corp () (OTCMKTS:PEMTF) and BevCanna have formalized their joint venture to sell hemp-derived cannabidiol (CBD) in the European market.
The joint venture, signed on Friday, has the exclusive right to sell BevCanna house brands in Europe for five years. The companies plan to lead off with LEV, a line of sparkling fruit forward lightly sparkling CBD-infused spring water beverages and water-soluble powders.
"Beverages are a healthier way to consume CBD, as they are a non-carcinogenic familiar consumption format and contain precise dosages per serving,” Mota CEO Joel Shacker said in a statement.
“Water-soluble cannabinoids are absorbed by the body through the bloodstream as opposed to the liver, making the actual dosage ingested more bioavailable and accurate. The absorption rate (bioavailability) of water-soluble CBD is up to two times faster than oil-based products, effectively achieving the same results in less time."
BevCanna has doubled the size of its outdoor cannabis cultivation site to 292 acres, from 130 acres in its prime location in British Columbia's fertile Okanagan Valley, which also includes a 40,000 square foot manufacturing facility in Osoyoos, as well as a spring water aquifer. It has access to a world-class 40,000-square-foot manufacturing facility, with a bottling capacity of up to 210 million bottles per year.
The Vancouver-headquartered company has multiple revenue streams, including house brands, white label bottling, and is actively pursuing joint ventures, licensing and acquisitions of technology and brands. The firm utilizes patented technology to produce premium tasting, water-soluble cannabinoid infusions using THC and CBD from both cannabis and hemp.
--Updates with share price movement--
Contact the author Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive
