AgraFlora Organics International Inc., a growth oriented and diversified international cannabis company, announced the company has entered into an interim agreement to acquire 100 per-cent of the issued and outstanding shares of Sanna Health Corp. Sanna is a Canadian cannabis company based in the Greater Toronto Area, which boasts cultivation and sales licenses for medical cannabis.
Brandon Boddy, Chairman and Chief Executive Officer of AgraFlora stated: "This is a landmark acquisition for AgraFlora. The integration of Sanna will more than double our forecasted 2020 production capacity. Sanna's existing on-site infrastructure will allow for complementary, margin-rich extraction capabilities, as well as a mission-critical east-cost high density population presence, affording us access to a proven and popular, market-leading brand/product portfolio which supplements our already identifiable and successful high-calibre brand suite. And equally critically, the acquisition of Sanna will enhance our high-visibility distribution across Canada as the Company gears up for a significant 2020 retail presence across the country, as well as other emerging jurisdictions."
Sanna is headquartered in the Greater Toronto Area, only 30 minutes from downtown Toronto, affording the Company unbridled access to the largest addressable Canadian cannabis marketplace. Sanna's flagship facility is situated on 16 acres and includes 27,000 square feet of Health Canada licensed cultivation and processing space. Coupled with an option to expand its current production area to 89,000 square feet, as well as ample commercial-industrial space for future expansion. Once Ontario's anticipated regulatory changes take effect, expanding retail opportunities, Sanna will look to architect and operate an on-site dispensary, allowing the Company to capitalize on its prime proximity to the seven million population in the GTA and immediately surrounding areas.
With ethanol extraction equipment installed on-site and high-margin agreements being negotiated to process upwards of 1,000 kg of hemp biomass per month, Sanna is primed to realize sustainable, near term cash flows. The Company forecasts that once optimized, Sanna's extraction facility will boast annual extraction capacity of 250,000 kilograms of dried cannabis and hemp biomass, much of which will be supplied by the Company's 88-acre outdoor cannabis grow located less than 90 minutes from its GTA headquarters, permitting streamlined logistics and reduced transportation costs.
Commencing in Q1 of 2020, Sanna will also finalize distillate supply contracts, currently in the final stages of negotiation. These supply contracts in conjunction with Sanna's industry-leading processing infrastructure will result in immediate high-margin revenues.
Sanna owns an 88-acre late-stage Health Canada outdoor cultivation applicant. The company plans to submit its affirmation of readiness and video evidence package for its initial 13-acre Zone One outdoor grow on or before March 1, 2020, in preparation for the 2020 outdoor cultivation season.
Located in Southwestern Ontario, Sanna's Zone One 13-acre outdoor grow is forecast to produce up to over 1,000 kg per acre of high-quality, low-cost cannabis flower, with a per gram unit contribution of less than $0.10. Sanna's planned Zone Two outdoor grow expansion will add an additional 75 acres of cultivation expanse and once licenced is expected to yield over 75,000 kg of dried cannabis per harvest.
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