Cronos Group enters multi-year supply agreement with MediPharm Labs
Cronos Group announced that it has entered into a multi-year supply agreement with MediPharm Labs. MediPharm Labs will supply Cronos Group with approximately $30M of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to $60M over 24-months. In addition, Cronos Group and MediPharm Labs have entered into a multi-year tolling agreement, where Cronos Group will supply bulk cannabis to MediPharm Labs' extraction facility in Barrie, Ontario, to fulfill certain additional processing needs of the company. Under the terms of the bulk resin supply agreement, Peace Naturals, a wholly-owned subsidiary of Cronos Group, will purchase a minimum of approximately $30M of cannabis concentrate from MediPharm Labs Inc., a wholly-owned subsidiary of MediPharm Labs, over the course of 18-months. Peace Naturals will also have a right of first offer to purchase an additional approximately $18M of cannabis concentrate over the same period, subject to the availability of such supply from MediPharm. The agreement includes an option for a mutual extension where, if extended, Peace Naturals would additionally purchase a minimum of approximately $6M over 6 months, and would have a right of first offer to purchase an additional approximately $6M over the same period, subject to the availability of such supply from MediPharm, bringing the total potential aggregate value of the agreement to over $60M to the end of April 2021. Under the terms of the cannabis concentrate program agreement, Peace Naturals will supply bulk quantities of dried cannabis to MediPharm for processing on a fee for service basis into bulk resin or other premium cannabis oil derivative products. The tolling agreement has a two-year term.