BevCanna Enterprises Inc (CSE:BEV) (OTCMKTS:BVNNF), a dominant player in the cannabis-infused beverages market, has inked a licensing agreement with Keef Brands for its infused beverage lines in Canada.
BevCanna said it will act as the exclusive licensee and co-packer for the award-winning Keef lines of beverages. It will leverage its extensive experience in developing and launching beverages in the Canadian market to “maintain compliance with Health Canada,” as well as all related “national sales and distribution efforts,” the company said in a statement.
In addition to BevCanna's role as licensee for Keef in Canada , BevCanna has engaged Keef, through its network of licensed manufacturing partners, to co-pack and distribute BevCanna's cannabis-infused beverage products in the United States. BevCanna will leverage the extensive Keef manufacturing and distribution network, which includes thousands of licensed dispensaries and delivery services across Colorado, California , Arizona , Nevada, Michigan , Oklahoma , and Puerto Rico.
Under the agreement, BevCanna has agreed to invest US$150,000 in Keef Brands by participating in a convertible debenture offering, in multiple tranches.
An April 2020 “Headset Insights” report found that Keef Brands offers six of the top ten selling cannabis beverages in Colorado, as well as three of the top ten-selling in California.
BevCanna CEO John Campbell described the partnership with Keef Brands as a “fantastic opportunity” for BevCanna.
"Keef's robust US co-pack and distribution network will be a significant asset for BevCanna's expansion plans in the US, and BevCanna's expertise in the Canadian infused beverage market will build Keef's Canadian presence. It's a strong combination, with excellent potential for both companies," he said in the statement.
Erik Knutson, the co-founder and CEO at Keef Brands, also hailed BevCanna as “an ideal partner” for Keef to move forward with in both the North American and global markets.
"The team's expertise in developing and launching appealing, innovative infused beverages is exactly what we've been seeking, and their experience in working within the Health Canada regulatory environment will be invaluable to Keef," Knutson said.
The maintenance of exclusivity in Canada is subject to mutually agreed milestones being met through BevCanna purchasing a targeted amount of goods in each calendar year. The agreement in Canada is for an initial term of three years, with a subsequent three-year renewal, at BevCanna's option.
If BevCanna has not been granted requisite cannabis licenses by Health Canada on or before December 31, 2020, Keef may terminate the agreement, unless the companies agree to extend the date by mutual written agreement.
In the US, Keef will help BevCanna in launching its US infused beverage line by providing it full access to its co-packer and distribution network. The arrangement will be additive, meaning that BevCanna will piggyback on Keef's volume-pricing arrangements that are in place. The firms will work together to figure out the product mix and launch timing for each individual US market, including the territory of Puerto Rico.
Meanwhile, if Keef expands into Mexico, the companies have agreed that the same terms that apply to the US and Puerto Rico would extend to the Mexican market.
Within twelve months, BevCanna also said it intends to export its products into the European market, either directly or via licensing agreements. Under the deal, BevCanna and Keef have agreed to negotiate in good faith to ensure Keef participates in BevCanna’s export program on terms still to be mutually decided.
Contact the author Uttara Choudhury at [email protected]
Follow her on Twitter: @UttaraProactive