IM Cannabis Corp. announced that on January 23, 2020 it signed definitive agreements to establish a medical cannabis cultivation and processing joint venture in Greece (the “Joint Venture”). The Company’s Joint Venture partner is Galen Industries Single Member Societe Anonyme, a Greek company established by a consortium of investors in Greece with extensive experience in the pharmaceutical, media, finance and energy sectors (“Galen”). In addition, the Joint Venture and IMC have signed a preferred supply agreement (the “Supply Agreement”) in which IMC has the right to purchase up to 25% of the total production from the Joint Venture. IMC expects to gain commercial and competitive advantages by supplying the German market and other emerging markets across Europe with EU-GMP medical cannabis products from the Joint Venture’s facility in Greece at preferred terms.
“Expanding IMC’s operations to Greece is another significant milestone in our Europe-focused growth strategy and we have found excellent local partners that share the same vision as we do,” said Oren Shuster, Chief Executive Officer. “Similar to Israel, Greece possesses excellent natural growing conditions for the cannabis plant. Once the Joint Venture receives EU-GMP certification, it will augment the sources from which the Company procures IMC-branded medical cannabis products for medical patients in Germany at first and throughout Europe over time.”
Galen’s Managing Director, Mr. Vasileios Georgopoulos said, “IMC was carefully selected as our partner due to its proven track record and is a distinguished brand of medical cannabis in Israel and Europe, which gives us great confidence in this Joint Venture in combination with our local market expertise. The medical cannabis market in Europe is a very large long-term opportunity and we will move quickly with IMC to establish an early advantage through this very focused Joint Venture. We are incredibly happy to partner with a great global player, while supporting the growth of a new medical industry in the recovering Greek market. We expect the Joint Venture to create many new job opportunities in the coming years.”
The Joint Venture
IMC will own 25% of the Joint Venture and the remaining 75% of the Joint Venture will be owned by Galen. Each party is committed to fund the initial capital expenditures, totalling approximately up to €8,000,000 to fund the construction of an EU-GMP certified cultivation and processing facility in Greece. IMC will invest from existing cash resources up to €1,500,000 into the Joint Venture, with the balance funded by Galen.
Execution of the Joint Venture’s business plan will start immediately and construction of greenhouses as well as the EU-GMP facility is expected to begin upon receiving the Establishment Approval from the Greek medical cannabis regulatory authorities. The Joint Venture land plot size is expected to be 100,000 to 180,000 square meters (or 1,076,000 to 1,938,000 sq. ft.).
The Supply Agreement
Under the Supply Agreement, IMC is entitled to purchase up to 25% of the medical cannabis produced by the Joint Venture, at a preferred price, for an initial period of five years. Once the Joint Venture reaches commercial production, the Supply Agreement enables IMC to diversify its procurement of medical cannabis to deliver IMC-branded products to patients in Europe.
IMC European Operations
Over the past year, IMC has made significant progress establishing its operations in Europe. In Germany, the Company has acquired Adjupharm GmbH (“Adjupharm”), an EU-GMP certified distributor, fully licensed to import, export and distribute medical cannabis. The first shipment of medical cannabis to Adjupharm from an EU-GMP facility in Europe is expected in Q2 2020.