Montréal Cannabis Médical and Canada House Wellness Group have entered into a definitive share exchange agreement for Canada House’s acquisition of all of the issued and outstanding shares of MTL Cannabis (“MTL” or “MTL Cannabis”) (the “Transaction”). The Transaction is between arm’s length parties and constitutes a “reverse takeover” of the Company, and it is anticipated that the Company will operate under the MTL Cannabis corporate name with shares trading on the CSE under a related ticker symbol following the closing of the Transaction (the “Closing”).
Prompted by the demonstrated and continued success of MTL’s top-selling Sage n’ Sour cultivar, this deal gives Mitch and Rich Clement, brothers and founders of flower-first MTL Cannabis, the opportunity to accelerate their Québec cultivation footprint while accessing the resources needed to meet the surging market demand for dried flower, the largest segment of the cannabis market. The Clement’s bring decades of cannabis expertise and top-quality genetics to the legal market, along with a strong understanding of scaling consistent product. The deal also provides the group with the ability to build upon MTL’s current brand portfolio, and develop a diverse flower menu bringing premium, accessible products to cannabis consumers while maintaining existing supply agreements.
Since its recreational market launch in October 2020, MTL Cannabis has emerged as one of Canada’s fastest-growing dried flower consumer brands, placing in the top five (5) in dried flower sales in most provinces. This momentum is due to the brand’s delivery of consistent, high-quality bud, along with the brand’s strategic pricing position which offers the consumer premium product benefits at value pricing. MTL Cannabis will continue to focus on its long-term CPG portfolio strategy for current and upcoming brands, supporting both the adult-use and medical markets.
The transaction will provide MTL Cannabis with immediate access to additional licensed cultivation space, more than doubling the company’s current 57,000 sq. ft. footprint and annual production capacity of 13,000 kilograms of high-quality dried flower, to 120,000 sq. ft. and 30,000 kilograms of annual production. MTL Cannabis has further expansion capabilities with an additional 58,000 sq. ft. of cultivation and production space through a second building situated at MTL’s Pointe-Claire location. Following the Closing, MTL Cannabis’ wholly owned subsidiaries will hold cultivation, processing, and sales licences for plants/seeds, flower, oil, concentrate, topical and edible products and will have existing supply agreements with nine Canadian provinces including British Columbia, Alberta, Ontario, and Québec.
“The consumer is asking for more of our flower, at the same quality as Sage n’ Sour. To meet their demands and build additional brands we need more space. Staying committed to the craft of growing a consistent supply of high-quality cannabis for the masses is what we focus on daily. This approach ensures we produce great weed that the consumer wants and allows retailers to feel confident in the MTL products they carry.” — Mitch Clement, COO MTL Cannabis
By controlling the quality of the flower, commercial opportunities in this segment will remain within reach and allow for ongoing market and segment growth. With dried cannabis flower representing the largest segment of national cannabis sales, high-quality, affordable offerings will continue to be a cannabis industry staple. MTL Cannabis will remain committed to markets, products, and channels that meet the needs of patients and recreational consumers who are looking for great, smokeable, well-priced dried flower.
“We are excited at the prospect of growing our distribution reach and capabilities by joining forces with Canada House’s teams at Abba Medix, Canada House Clinics (“CHC”), and IsoCanMed. Being able to commercially scale our dried flower, while supporting patient care and Canada House’s Veteran program across Canada is something that we are excited to do. With the Québec medical market still in relative infancy, we are looking forward to bringing Québec Veterans and patients the support and products they need and deserve.” — Rich Clement, CEO MTL Cannabis
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