Christina Lake Cannabis Corp. (CLC), a leading producer of high quality extracts and sun grown cannabis, announced that it has completed the acquisition of certain assets from a private British Columbia corporation. The deal includes outdoor cultivation facilities in Midway, BC, related harvesting and manufacturing equipment, and approximately 19,000 kg of biomass.
CLC secures its supply chain and cost certainty
The acquisition will allow CLC to meet the rising customer demand for its products, which are used by brands across the Canadian cannabis market to manufacture vapes, edibles, pre-roll and infused pre-roll products for both the recreational and medical markets. The increased capacity is a catalyst for robust topline growth and improved profitability by harnessing economies of scale.
Mark Aiken, Chief Executive Officer of Christina Lake Cannabis, said in a press release: “As the demand for our products has continued to grow over the last 2 years, we have had to supplement our own cultivation with tens of thousands of kilos of biomass supply from the wholesale market. The Midway acquisition secures our supply chain providing CLC with cost certainty and solid control over input quality.”
CLC leverages its genetic development and outdoor cultivation skills
The Midway property represents a total of 342 acres, with slightly over 100 acres of licensed cultivation space. With this acquisition, CLC will expand its total licensed outdoor cultivation footprint to over 120 acres. Potential further expansion of additional acreage is available and could be licensed by the Company should the demand arise.
CLC plans to plant its first 80-acre crop of proprietary strains in the spring of 2024, expanding to the full 100 acres in 2025. The Company will leverage the strength of its genetic development and outdoor cultivation skills to support the additional growth. CLC’s products are known for their high quality, potency, and terpene profile, which are derived from the natural sunlight and soil conditions of the region.
Jay McMillan, Chairman of the Christina Lake Cannabis Board of Directors, said: “Over the last 18 months CLC has focused on operational efficiencies and investment in their processing infrastructure. This has resulted in increased productivity and expanded capacity. The investment in the Midway property now aligns CLC’s cultivation and processing capability, positioning the company for future growth.”
CLC pays the purchase price with a secured convertible promissory note
The purchase price for the acquisition was paid through the issuance of a secured convertible promissory note having a 5-year term. The note is secured by the land and buildings acquired in the transaction. The note bears interest at a rate of 10% per annum for year 1, 15% per annum for year 2, and 20% per annum for the remaining 3 years.
The note is convertible into common shares of CLC at a conversion price of $0.50 per share, subject to adjustment in certain events. The note also contains customary anti-dilution provisions and covenants. The note may be prepaid by CLC at any time without penalty.
The transaction is subject to the approval of the Canadian Securities Exchange and other customary closing conditions.