Zenabis Announces Term Sheet for the Supply of Medical Cannabis to the German Market and Receipt of a License Amendment for Zenabis Stellarton

Zenabis Global Inc. (TSX: ZENA) (“Zenabis” or the “Company“) is pleased to announce that it has assigned its binding term sheet with Farmako GmbH (“Farmako”) to its subsidiary company ZenPharm for the supply of  European Union Good Manufacturing Practices (“EU GMP”) certified medicinal cannabis and amended the terms to provide for a minimum volume guarantee.  The Company is also pleased to announce the receipt of its sales license amendment for Zenabis Stellarton from Health Canada.

Medicinal Cannabis Supply to Germany

  • Zenabis has assigned its term sheet with Farmako, which was announced on April 29, 2019, to its Maltese-based European joint venture, ZenPharm.
  • ZenPharm is expected to process EU GMP compliant bulk from Zenabis to supply Farmako with a minimum of 500 kg per year for a term of three years.
  • This is subject to ZenPharm itself obtaining EU GMP certification, which is expected to occur in Q3, 2020.
  • Shipments to Farmako are expected to commence in Q4, 2020.
  • ZenPharm anticipates supplying cannabis oils to Farmako beginning in 2021.

Kevin Coft, Chief Executive Officer of Zenabis, stated, “The assignment of this term sheet, and addition of minimum volumes, reinforces Zenabis‘ impetus for its international medicinal cannabis activities, in particular in Europe. Working with key distributors like Farmako is vital in ensuring patient accessibility to medicinal cannabis products in a manner that safeguards quality and consistency of supply. Zenabis anticipates significantly increasing supply to Europe from Q4 2020 onward, where bulk pricing of cannabis is now significantly more attractive than in the Canadian market.”

“Having visited Zenabis’ Canadian facility at the end of 2019, I was very impressed.  We have visited many facilities, and Zenabis’ ability to maintain the highest standards of professionalism and quality throughout the organization even while operating on a massive scale is commendable.  Zenabis’ professional approach to growing cannabis, combined with Natrix Sciences’ experience with innovative and complex pharmaceutical products in Malta is a perfect interplay to provide a broad portfolio of high quality medical cannabis products for patients in Germany and across Europe.”

Katrin Eckmans, Farmako Chief Executive Officer

Angèle Azzopardi, Chief Executive Officer ZenPharm said, “Our Team is incredibly proud to carry this operation forward. This agreement not only showcases Zenabis’ commitment but also evidences the Zenabis, ZenPharm trans-Atlantic synergy in delivering medicinal cannabis products to Europe. We look forward to developing our relationship with Farmako, especially as more conventional dosage forms of medicinal cannabis products come to the market.”

Updated Timeline and Next Steps

Date, or anticipated timingActivity
December 21, 2017Zenabis, as Sun Pharm Investments Ltd., received an initial letter of intent from Malta Enterprises for the processing of cannabis in Malta.
November 28, 2018Zenabis entered into a letter of intent to establish a joint venture to convert Natrix’s EU-GMP certified facility in Malta to produce finished medical cannabis products using cannabis supplied from Zenabis’ facilities in Canada.
April 29, 2019Zenabis enters into its initial binding term sheet with Farmako.
October 4, 2019Zenabis receives notification from Malta Enterprise of acceptance of the amendment of its original letter of intent to reflect the joint venture with Natrix.
October 2, 2019ZenPharm incorporated through the execution of a shareholders’ agreement and incorporation documentation approved by Malta Enterprises. Supply agreement executed between Zenabis and ZenPharm.
April 23, 2020First shipment completed from Zenabis to ZenPharm to allow for completion of ZenPharm EU-GMP approval within the original Natrix’ EU-GMP facility.
June 3, 2020Zenabis assigns Farmako term sheet to ZenPharm, with amendments to include minimum annual volumes.
July 2020Anticipated completion of Malta Medicines Authority inspection of ZenPharm facility.
Q4 2020Anticipated first commercial shipments to ZenPharm for processing and shipment to other clients.

License Amendment for Zenabis Stellarton

  • The amendment, received on May 29, 2020, allows Zenabis‘ facility in Stellarton, Nova Scotia to sell dried cannabis, fresh cannabis, cannabis edibles, cannabis extracts and cannabis topical products to provincially and territorially authorized retailers.
  • It also authorizes the sale of cannabis and cannabis products to holders of a license for sale for medical purposes.
  • Stellarton was previously only licensed for the cultivation and processing of cannabis.
  • This license will enable implementation of the Company’s strategy to utilize Stellarton as the Company’s center of excellence for Cannabis 2.0 products, including beverages and edibles, pre-rolls production, finished goods packaging, and retail and medical order fulfilment.

Kevin Coft, Chief Executive Officer of Zenabis stated, “We are extremely pleased to receive this license amendment for Zenabis Stellarton. The addition of sales activities to Stellarton’s license, which already included cultivation and processing activities, will enable the Company to now execute its strategy to optimize operations and improve service to our provincial and territorial retail customers by making Zenabis Stellarton our center of excellence for 2.0 products, Namaste and Re-Up pre-rolls and retail and medical order fulfilment.”

Zenabis currently anticipates adding or transitioning the following activities to Zenabis Stellarton:

ActivityAnticipated Transition or Establishment
HYTN BeveragesInstallation of HYTN beverage line has taken place, and commissioning is anticipated to be complete by the 15th of June, with commercial production commencing before the end of June, with anticipated first commercial shipments in the first week of July.
Edible ProductionFirst processing and testing of edible product has taken place. Commercial production is expected to commence by early July.
Concentrate ProductionThe production of enhanced concentrate products is expected to commence in late July.

Expanding our vape production to include 510 thread vape products is also expected to commence in July; however, this will commence at Zenabis Atholville, where the Company’s extraction and PAX vape cartridge filling activities currently take place.

Olen Vanderleeden, the Vice President, Strategic Development for Zenabis stated; “The Zenabis Sales and Business Development team is very excited about the granting of this license amendment, as it will enable us to execute on an aggressive 2.0 product strategy aligned with current and emerging market demand.  This sales license also supports our capacity to diversify our portfolio through new product launch, expansion into new domestic markets, and expands our capacity to fulfill current white label and contract manufacturing agreements. With this license, Zenabis Stellarton is well positioned as a Center of Excellence for Cannabis 2.0 products, including beverages and edibles. We look forward to our continued partnerships and opportunities as a result of this additional capacity.”

About Zenabis

Zenabis is a significant Canadian licensed cultivator of medical and recreational cannabis, and a propagator and cultivator of floral and vegetable products. Zenabis employs staff coast-to-coast, across facilities in Atholville, New Brunswick; Delta, Aldergrove, Pitt Meadows and Langley, British Columbia; and Stellarton, Nova Scotia. Zenabis currently has 111,200 kg of licensed cannabis cultivation space across four licensed facilities. Zenabis has 3.5 million square feet of total facility space dedicated to a mix of cannabis production and cultivation and its propagation and floral business.

Zenabis expects its Zenabis Atholville, Zenabis Stellarton and Zenabis Langley facilities to be in steady state production in 2020. The Zenabis brand name is used in the cannabis medical market, the NamasteBlazery, and Re-Up brand names are used in the cannabis adult-use recreational market, and the True Büch brand name is used for Zenabis’ kombucha products.

About Farmako GmbH

Farmako GmbH is a pharmaceutical wholesaler based in Frankfurt, Germany. The company focuses on the distribution of medical cannabis to pharmacies with the aim of securing the supply for cannabis patients and closing the gap between supply and demand for medical cannabis. Farmako is planning to expand its business model into other European countries with a corresponding legal basis, scaling towards its goal of being Europe’s leading distributor of medicinal cannabis. The company already distributes medical cannabis to pharmacies in Germany since March 2019 and is fully licensed in the UK to start distribution operations there in 2020. Farmako is a 100% subsidiary of AgraFlora Organics International Inc.           
For more information please visit: https://www.farmako-global.com/.

About ZenPharm Ltd.

ZenPharm Ltd., a subsidiary of Zenabis Global Inc and Natrix Sciences Ltd., is a vertically integrated seed to sale European pharmaceutical company specializing in the delivery of cannabis-based treatments that are rooted in the fundamental medicinal standards of safety, quality and efficacy. Located in the Hal Far Industrial Estatein Malta, the premises forms part of a long-standing EU GMP pharmaceutical operation. Close proximity to Malta International Airport ensures consistent, reliable and frequent trade routes throughout Europe.

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