Supreme Cannabis Expands CPG Manufacturing Capacity and Provides Operational Update

Published: December 6, 2019

Supreme Cannabis Expands CPG Manufacturing Capacity and Provides Operational Update

Supreme Cannabis introduced its dedicated manufacturing, processing and packaging facility located in Kitchener, Ontario (“Supreme Cannabis Kitchener” or the “Kitchener Facility”). In response to internal requirements and foreseeable market demand, the Company leased the Kitchener Facility, which is a 107,000 square foot facility with desirable structural features for large-scale processing, packaging and shipping. The Kitchener Facility will function as a central manufacturing, processing and packaging centre for Supreme Cannabis brands and, once the Kitchener Facility is complete, Supreme Cannabis intends to package, distribute and brand third-party cannabis inputs from quality-focused cultivators. The Kitchener Facility’s strategic location in Canada’s innovation hub, Kitchener, Ontario, provides access to a large and skilled labour force, highways and airports, and two of the Company’s other nearby operating assets.

Supreme Cannabis will be retrofitting and licensing the existing facility in three phases. The Company has completed the first phase of construction on the Kitchener Facility, which includes a retrofitted multi-purpose processing clean room. At this stage, the Company has submitted its application to Health Canada for a cannabis processing license. This license will allow Supreme Cannabis to conduct product packaging and value-added processing at the Kitchener Facility. In Q4 FY2020, the Company expects to begin whole flower packaging and pre-roll manufacturing for Supreme Cannabis brands at the Kitchener Facility.

“With Supreme Cannabis Kitchener, we add the infrastructure to centralize internal processing and manufacturing and the ability to act as a packaging, manufacturing and distribution partner for third-party producers,” said Navdeep Dhaliwal, CEO of Supreme Cannabis. “Centralizing this increasingly important function in the value chain will create manufacturing, packaging and distribution synergies across our brands and allow for our existing operating assets to maintain a focus on their core capabilities. With this manufacturing centre of excellence, we gain the flexibility to respond to market trends such as working with third-party cannabis cultivators and long-term optionality to move into additional cannabis 2.0 product categories.”

“With the addition of this operating asset, we welcome Sándor Wolkensperg as General Manager of Supreme Cannabis Kitchener,” added Mr. Dhaliwal. “Sándor brings diverse experiences to this new role having previously led food processing, tobacco manufacturing and commercial packaging operations. Our Kitchener Facility will benefit from Sándor’s expertise in regulated operations, experience working on brown-field facility start-ups and track record of successfully leading large teams through transformational periods of growth.”

In his role as General Manager of Supreme Cannabis Kitchener, Mr. Wolkensperg will provide senior on-site leadership, oversee a diverse team, conduct operations planning and measure execution and performance. Prior to joining Supreme Cannabis Kitchener, Mr. Wolkensperg served as Vice President of Operations for Rimowa North America (“Rimowa”), a luxury brand owned by the global luxury conglomerate LVMH. At Rimowa, Mr. Wolkensperg led manufacturing, supply chain and logistics across multiple complexes serving North and South American markets. Mr. Wolkensperg’s 30 plus years of operations experience also includes his role as Director of Operational Excellence at an international Fortune 500 company and over ten years of operational leadership positions in the regulated food and tobacco industries, including roles at Maple Leaf Foods and Imperial Tobacco Canada.

Operational Updates.

“The Kitchener Facility follows the same centre of excellence approach we have taken across Supreme Cannabis’ existing suite of operating assets. With phased construction at the Kitchener Facility underway, we look for near-term opportunities to utilize the specific capabilities and expertise at each of our facilities,” said John Griese, COO of Supreme Cannabis. “Health Canada recently granted two of our operating assets additional licenses that will allow for the near-term production of the Company’s cannabis 2.0 products. We have created long-term opportunities for international revenue by building our Kitchener, Blissco and Scarborough facilities to a pharmaceutical manufacturing standard and preparing these sites to meet GMP compliance standards.”

In Q2 FY2020, Supreme Cannabis completed construction on its 12,000 square foot facility in Langley, BC (the “Blissco Facility”) adding ethanol-based extraction to its existing CO2 extraction capabilities. In October 2019, Blissco received a license amendment from Health Canada, which allows for the sale of cannabis 2.0 products. With this license amendment and the capacity to produce over 7,000,000 tincture bottles annually, Blissco’s state-of-the-art extraction facility will process product for 7ACRES’ vaporizer partnership with Pax Labs, Inc. (“PAX”). Going forward, in addition to producing high quality, full spectrum oil for the Blissco brand, the Blissco Facility will use its extraction expertise to fill 7ACRES’ PAX Era vaporizer pods. The company expects to introduce 7ACRES pods for the PAX Era by the end of Q3 FY2020.

In Q1 FY2020, Supreme Cannabis closed the acquisition of Truverra and acquired a 5,000 square foot facility licensed under Canadian Clinical Cannabinoids Inc. in Scarborough, Ontario (“Supreme Cannabis Scarborough”). Supreme Cannabis Scarborough provides R&D space for the Company to test new products and develop medicinal science intellectual property. In November 2019, Supreme Cannabis Scarborough received its processing license from Health Canada, which will allow for the processing of cannabis concentrates. With the intention of scaling future concentrate manufacturing capabilities at the Kitchener Facility, the Company will complete small-batch concentrate manufacturing and testing at Supreme Cannabis Scarborough. Supreme Cannabis expects to introduce limited 7ACRES branded high end concentrate products to the Canadian market in Q4 FY2020.

Supreme Cannabis has determined that Cambium Plant Science’s (“Cambium”) genetics business will continue to operate out of the 7ACRES cultivation facility in Kincardine, Ontario. The Company is no longer proceeding with capital expenditure on the construction of the previously announced Cambium facility.

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