Heritage will provide extracted distillate to Zenabis, while Zenabis will supply Heritage with dried flower and trim for extraction
Holdings Corp () (OTCMKTS:HERTF) announced Tuesday details of its mutual supply agreement with Global Inc (CVE:ZENA), a licensed cannabis cultivator.
In a statement, Heritage said both companies have entered into two further agreements -- right of first offer (ROFO) and cannabis extraction. Both agreements took effect on November 6 via Voyage Cannabis Corp, a subsidiary of Heritage. In May, both companies announced initial plans for a supply agreement.
Under the terms of the ROFO, Heritage will have the right to acquire high-quality trim cultivated by Zenabis, which is not otherwise committed under a pre-existing purchase agreement, from any of its licensed facilities.
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Zenabis will provide written notice to Heritage, specifying the amount of product available for purchase and the material terms and conditions, including the purchase price and a certificate of analysis.
Heritage will have the first right to purchase any or all of the trim available by executing a purchase notice and binding purchase agreement. Trim that is not purchased by Heritage may be sold by Zenabis to any third party at a price per gram no lower than the price set forth in the offer notice.
The ROFO is for an initial term of 12 months and will automatically renew for successive 12 month periods unless terminated via written notice by either party.
Under the terms of the extraction agreement, Zenabis will supply Voyage with select cannabis biomass for processing into the distillate. Heritage will deliver the final product by the end of 2019.
"We are pleased to see our relationship with Zenabis expand to include further commitments on production and formulation," said Clint Sharples, CEO of Heritage. "We are bringing together our specialized capabilities to address the expanding cannabis market and the growing demand for new products."
Andrew Grieve, CEO of Zenabis, stated: "This agreement between Zenabis and Heritage is an important step for us as we look to grow our product offerings. As the market expands, we will continue to fill our distribution channels with high-quality options."
New Brunswick-based Zenabis owns six indoor and greenhouse facilities across Canada, four of which are intended for cannabis cultivation. If all four such facilities are fully built out and converted to cannabis production, they would have a design capacity to yield approximately 479,300 kilograms of dried cannabis annually, according to the company.
Based in Toronto, Heritage currently has four businesses under its umbrella that run the gamut from extraction to production.
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