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WeedMD inks letter of intent to buy Canadian craft cultivator CannTx Life Sciences in an all-stock deal

Published: 08:55 31 May 2021 EDT

WeedMD Inc -
WeedMD said by merging Guelph, Ontario-based CannTx's operation it will bring the company closer to profitability

WeedMD Inc (CVE:WMD) (OTCQX:WDDMF) (FRA:4WE) revealed it has signed a letter of intent (LOI) to acquire privately-owned craft cultivator CannTx Life Sciences Inc in an all-stock transaction as the company separately reported its latest results.

Financial details of the transaction were not disclosed but WeedMD said the acquisition of Guelph, Ontario-based CannTx, which specializes in tissue culture and micropropagation techniques, agricultural research, craft cultivation, and processing of new cannabis products such as rosin and hash, is expected to help create synergies and further cost efficiencies to bring new strains and high-margin products to market at greater scale and consistency.  

“With the acquisition of CannTx, we will now be able to participate across all market segments with a strong portfolio of refined cannabis brands and products that consumers are moving towards,” WeedMD Interim CEO George Scorsis said in a statement.

READ: WeedMD on a pathway to profitable growth as its Cannabis 2.0 efforts accelerate

“The CannTx team is nationally regarded as one of the premier leaders in genetics validation and more recently for its craft cultivation and solventless, full-spectrum products under the Royal City Cannabis Co. brand - highlighted as some of the best craft products in the country. We recognized that merging our talent and companies will solidify our respective businesses and together, move us closer to profitability," Scorsis added.

Under the terms of the LOI, WeedMD will acquire and integrate CannTx’s business operations, including CannTx’s business to business (B2B) and adult-use businesses currently doing business as Steadystem Solutions and Royal City Cannabis Co.

The transaction is expected to close in mid-year 2021.

Separately, WeedMD reported a 41% year-over-year increase in its fiscal 2020 net revenue to C$29.4 million, as its weighted average cost per gram fell by 42% to $0.46 in 2020.

The company also announced preliminary unaudited first-quarter 2021 gross revenue of C$12 million, representing a 40% increase in high-margin, direct-to-consumer/patient sales when compared to the same period last year and up 72% from 4Q 2020

WeedMD noted that it harvested 33,751 kilograms in 2020, up 88% from 2019, with more Grade A flower.

WeedMD owns, leases, and operates: a 158-acre property in Strathroy, Ontario with up to 550,000 square feet of greenhouse footprint and up to 100 acres of outdoor cultivation area; a 26,000 square foot indoor facility in Aylmer, Ontario, which specializes in cannabis extraction and processing; and a 14,850 square foot indoor facility in Bowmanville, Ontario that focuses on product research, processing, and fulfillment.

Contact Sean at sean@proactiveinvestors.com

WeedMD signs LOI to create Consumer-Centric Product Portfolio with...

WeedMD Inc. (CVE: WMD – OTCQX: WDDMF) Interim CEO George Scorsis joined Steve Darling to share details the company has signed an LOI to acquire craft cultivator CannTx Life Sciences in an all-stock deal. Scorsis telling Proactive CannTx, which in Guelph, Ontario, is a highly regarded cultivator...

on 06/01/2021