BevCanna Enterprises Inc (CSE:BEV) (OTCPINK:BVNNF) has signed a non-binding letter of intent (LOI) with Maritime-based cannabis producer Argentia Gold Corp to exclusively represent its line of cannabis-infused beverages in Newfoundland, Prince Edward Island (PEI) and New Brunswick.
Under the LOI, BevCanna is expected to provide finished cannabis and cannabis extract products, which Argentia will distribute and sell within the three Canadian provinces. BevCanna will pay a 15% service fee, with a 5% bonus if certain sales milestones are reached.
The companies expect to sign a definitive agreement within the next 45 days.
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There is a big market in the region for cannabis-infused beverages, the company said, noting that the provinces’ consumption rates — nearly 26% in Newfoundland and 21% in PEI — are among the highest in Canada.
"Argentia is the ideal partner for us in the burgeoning Atlantic market," BevCanna chief strategic officer John Campbell said in a statement. "They have an unparalleled knowledge of the regional cannabis landscape and a detailed understanding of the distribution network. They also have excellent relationships with the provincial bodies in these provinces, which will assist us as we focus on building our presence in the region."
By 2025, the market for cannabis is expected to expand to $56 million annually in New Brunswick, $49 million in Newfoundland and $21 million in PEI. Argentia has a strong knowledge of the Atlantic cannabis market, the company said.
"We're excited to bring BevCanna's innovative and diverse cannabis-infused beverage portfolio to the Atlantic region," Argentia Head of Business Development Dave Thomson added.
"We are laser-focused on bringing the same high-quality, in-demand products that are being sold in the larger Canadian markets to the Atlantic provinces, and we expect BevCanna's upcoming line of beverages to be extremely popular with consumers."
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