Cannabis Investment Club

[JohnCM]

Cronos Group and MediPharm Labs Enter Cannabis Concentrate Supply Agreement

14 MAY 2019

Cronos Group and MediPharm Labs Enter Additional Multi-Year Tolling Arrangement

TORONTO, May 14, 2019 (GLOBE NEWSWIRE) -- Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“Cronos Group” or the “Company”), is pleased to announce that it has entered into a multi-year supply agreement with MediPharm Labs Corp. (TSXV: LABS) (OTCQX: MEDIF) (“MediPharm Labs”). MediPharm Labs will supply Cronos Group with approximately $30 million of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to $60 million 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’ state of the art extraction facility in Barrie, Ontario, to fulfill certain additional processing needs of the Company.

“As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products,” said Mike Gorenstein, CEO of Cronos Group. “Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall.”

“With the continued evolution of the Canadian cannabis industry, we are excited to partner with Cronos Group in their journey to launch new products and secure MediPharm Labs’ high-quality private label supply of concentrates,” said Patrick McCutcheon, CEO, MediPharm Labs. “We look forward to supporting the team at Cronos Group with our specialized extraction capabilities and expertise to address a rapidly expanding cannabis market and growing consumer demand.”

Bulk Resin Supply Agreement

Under the terms of the Bulk Resin Supply Agreement (the “Agreement”), Peace Naturals Project Inc. (“Peace Naturals”), a wholly-owned subsidiary of Cronos Group, will purchase a minimum of approximately $30 million of cannabis concentrate from MediPharm Labs Inc. (“MediPharm”), 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 $18 million 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 $6 million over 6 months, and would have a right of first offer to purchase an additional approximately $6 million over the same period, subject to the availability of such supply from MediPharm, bringing the total potential aggregate value of the Agreement to over $60 million to the end of April, 2021.

Cannabis Concentrate Program Agreement

Under the terms of the Cannabis Concentrate Program Agreement (the “Tolling 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.