Delta 9 Signs Supply Agreement with Sundial Growers for 5,000 Kilograms of Cannabis
WINNIPEG, March 15, 2018 /CNW/ – DELTA 9 CANNABIS INC. (TSXV:NINE.V – News) (“Delta 9” or the “Company”) has signed a Memorandum of Understanding to purchase up to 5,000 kilograms of cannabis from Alberta-based Sundial Growers Inc. (“Sundial”).
The purchase is designed to increase Delta 9’s ability to meet the anticipated market demand following the full legalization of adult-use cannabis in Canada. The agreement commits Sundial to supply up to 5,000 kilograms of both dried cannabis and/or cannabis derivatives “to meet or exceed” Delta 9’s market demand in the period post-legalization. Delta 9 CEO John Arbuthnot says the agreement was reached as part of the company’s commitment to supply the Manitoba market. Delta 9 and partner Canopy Growth Corporation (Canopy Growth) (TSX:WEED.TO – News) were selected in February by the Manitoba government as one of four successful bidders to a license to retail cannabis in the province.
Delta 9 and Canopy Growth have committed a significant supply of cannabis product for the provincial market. Delta 9 is increasing its annual production in Manitoba to 17.5 million grams per year by the end of 2019.
“We’ve committed to producing a baseline amount of product for the Manitoba market, and we are confident we can achieve those numbers,” said Arbuthnot. “However, we would like to exceed those projections in order to not only meet demand in Manitoba, but also meet or exceed our commitments to national sales under our CraftGrow agreement with Canopy Growth.”
Delta 9 and Canopy Growth announced in December that Delta 9 had joined Canopy Growth’s CraftGrow program. The agreement provides Delta 9 with a national sales channel to supplement to the Company’s strong presence in Manitoba, says Arbuthnot. “No one can really predict what will happen in the cannabis market in the first year after legalization, but early indicators are that demand will increase dramatically, and we intend to be ready for that demand,” he said.
The agreement is also beneficial for Sundial, which currently has a cultivation license but has not yet secured a license to sell from Health Canada. Sales can only take place through an already licensed producer such as Delta 9, which has the testing and quality assurance protocols in place to ensure compliance with Health Canada regulations.
“Sundial is committed to providing Canadians with quality products, and we are excited to work with Delta 9 to bring our products to market as legalization occurs next summer, said Sundial Chief Commercial Officer Andrew Stordeur. “We believe there are long term benefits to working together for both companies.”
The current agreement is a non-binding Memorandum of Understanding designed to set out the basic working relationship between the two companies. The parties intend to formalize the Supply Agreement in the near future.
About Delta 9 Cannabis Inc.
Delta 9’s wholly-owned subsidiary, Delta 9 Bio-Tech Inc., is a licensed producer of medical marijuana pursuant to the ACMPR and operates an 80,000 square foot production facility in Winnipeg, Manitoba, Canada. Delta 9’s shares trade on the TSX Venture Exchange under the symbol “NINE”.
About Sundial Growers Inc.
Sundial Growers Inc. (“Sundial”) is a privately held, Alberta-based Health Canada ACMPR-approved licensed producer of medical cannabis. Sundial combines tried and true heartland farming practices with innovative horticultural techniques to grow a select range of cannabis strains. Our focus is on producing consistent cannabis that our customers can trust.
Sundial currently operates an 31,000 square foot production facility in Rocky View, Alberta, and has two separate production facilities in various stages of completion and licensing. By 2020, we expect to be one of the leading cannabis companies in the country with a projected production of over 100 million grams of dry cannabis and over 32 million grams of concentrate or cannabis extract.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding the Company’s future business plans and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Forward looking statements in this news release include statements relating to: (i) Delta 9’s expansion plans; (ii) Delta 9’s production of cannabis; (iii) approvals for Delta 9’s production facilities by Health Canada; (iv) demand for Delta 9’s products; and (v) Delta 9’s cost to produce its grow pods. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including that Delta 9’s currently contemplated expansion and development plans may cease or otherwise change, Delta 9’s production of cannabis may be lower than expected, Delta 9 may not obtain the required approvals from Health Canada, demand for Delta 9’s products may be lower than anticipated, Delta 9’s cost to produce its grow pods may be higher than expected and all other risk factors set forth in the filing statement of Delta 9 dated October 25, 2017 which has been filed on SEDAR. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. Readers are urged to consider these factors carefully in evaluating the forward-looking statements contained in this news release and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by these cautionary statements. These forward-looking statements are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable securities laws.