Canada House Wellness Group, a fully integrated medical cannabis company, is pleased to provide an update with respect to its previously announced transaction with Montréal Cannabis Médical Inc. As previously announced on November 26, 2021, the Company and MTL are working diligently on the integration of their businesses in advance of the closing of the Transaction, now expected to occur in calendar Q2 2022, subject to the satisfaction of all remaining closing conditions, namely the receipt of requisite MTL Cannabis audited financial statements, the receipt of applicable regulatory approvals, and the shareholder approval described in the Company’s press release dated November 26, 2021.
Canada House is working closely with MTL Cannabis and their auditors on the completion of MTL Cannabis’ audited financial statements for the years ended March 31, 2020 and 2021 and reviewed interim financial statements for the three and nine month periods ended December 31, 2021 (the “MTL Financial Statements“). In this respect, because MTL Cannabis’ auditors were appointed during 2021, they were not able to observe the counting of MTL Cannabis’ physical inventories or biological assets at March 31, 2020 and, accordingly, will not be able to express an unmodified opinion as it relates to inventory and biological assets. Canada House has applied to the Ontario Securities Commission for exemptive relief to permit the auditors of MTL Cannabis to express a modified opinion relating to these matters. There is no assurance that such relief will be granted on the conditions applied for or at all. However, the Company and MTL Cannabis currently anticipate delivering a management information circular to its shareholders in calendar Q2 2022 in respect of a shareholders’ meeting to follow.
“Given the delay in completing the Transaction due to the finalization of MTL Cannabis’ financial statements and the required conversion from private company reporting to IFRS, we feel it is vital to communicate our unwavering commitment to this Transaction,” commented Rich Clement, CEO of MTL Cannabis. “We have made tremendous progress with Chris and the broader Canada House team to integrate our business to the best of our ability in advance of closing so that we maximize the Company’s operational and financial performance leading to the completion of the Transaction and the concurrent resumption of trading. We believe bringing Canada House and MTL Cannabis together will result in a combined business that will change the way Canadian Cannabis companies are perceived both operationally and on the bottom line. I want to thank Chris and his team for their continued support as we optimize our respective businesses.”
As the Transaction constitutes a “fundamental change” within the meaning of CSE policies, trading in Canada House’s common shares is currently halted and will remain halted until the resumption of trading is approved by the CSE, which is not expected to occur until completion of the Transaction. For further details on the Transaction, see the Company’s press release dated August 9, 2021 and November 26, 2021 available on SEDAR at www.sedar.com.
Integration and Business Update
Cultivation and Sales Update
MTL Cannabis has continued to work closely with Canada House’s wholly owned subsidiaries, IsoCanMed Inc. (“ICM“) and Abba Medix Corp. (“Abba“), to increase MTL Cannabis’ presence across Canada. MTL Cannabis’ Cookies n’ Cream dried flower SKU outperformed expectations as an exclusive offering in Ontario and will see its distribution expanded alongside Sage & Sour, in dried flower and soon to be listed pre-roll formats, to 6 Provinces across Canada.
In addition, Abba and MTL Cannabis have secured exciting new genetics testing in excess of 26% THC potency which are currently being cultivated at scale within MTL Cannabis’ low-cost facility. These new genetics will compliment previously accepted SKUs being launched in 3 of Canada’s largest recreational markets on Canada House’s licenses (ICM and Abba), currently expected before June 2022.
Finally, MTL Cannabis has agreed to fund capital expenditures related to the retrofit of ICM’s licensed production facility located in Louiseville, Québec. The retrofit has been initiated and will be completed under the guidance of MTL Cannabis and will convert the grow methodologies at the ICM facility to align with existing methodologies at MTL Cannabis’ existing 57,000 sq. ft. licensed facility. The retrofit of the ICM facility is being completed in two phases. The initial and second phases of the retrofit will result in incremental increases of ICM’s annual production capacity of 5,000 kgs and 5,000 kgs respectively (10,000 kgs total).
Clinic and Medical Cannabis Update
Abba and Canada House Clinics (“CHC“) continue to grow their medical presence diligently and deliberately, driven by Abba’s leading portfolio of medical cannabis products (which now includes topicals, suppositories and an even larger list of partners, brands and choices) and CHC’s provision of leading cannabinoid therapy services. Abba’s monthly medical cannabis sales have increased over 60% from summer of 2021 levels and have exceeded $500K monthly since Nov 2021. The recent launch of Abba’s new bilingual shopping portal has led to increased functionality, higher satisfaction, and increased sales in Quebec. CHC has now exceeded 4,000 Veterans and Abba has reached 1,000 Veterans showing continued success in serving this important segment. Abba daily medical sales exceeded $40K per day for the first time in March 2022.
About MTL Cannabis
MTL Cannabis is a privately owned Canadian License Holder located in Montreal, Quebec. As a flower-first company built for the modern street, MTL Cannabis is a 57,000 sq ft licensed facility with room to expand to 130,000 sq ft in the existing 2 buildings and possible expansion to over 300,000 sq ft. Under the existing footprint, the indoor facility uses proprietary hydroponic growing methodologies supported by handcrafted techniques to produce products that are truly craft for the masses. MTL Cannabis currently produces over 13,000 kgs annually, yielding over 2kg per light. With supply deals in all ten Canadian provinces, the company is currently in the top 5 in dried flower sales in almost all markets. MTL Cannabis’ goal has been clear from the start, be the brand that brings the best of the street to the shelves by staying committed to the craft. Please visit http://www.mtlcannabis.ca/
About Canada House Wellness Group
Canada House Wellness Group is the parent company of Abba Medix Corp., a Licensed Producer in Pickering, Ontario that produces high quality medical grade cannabis; IsoCanMed Inc., a Licensed Producer in Louiseville, Québec growing best-in-class indoor cannabis, in its 64,000 sq. ft. production facility employing state-of-the-art vertical, aeroponic production methodologies; Canada House Clinics Inc., with clinics across the country that work directly with primary care teams to provide specialized cannabinoid therapy services to patients suffering from simple and complex medical conditions; and Knalysis Technologies, a provider of fully customizable, cloud-based software that links physician, provider, and patient to data that supports treatment with medical cannabis.
Canada House Wellness Group’s goal is to become the leading cultivator of premium craft cannabis and provider of cannabinoid therapy, targeting the medical cannabis markets globally. Please visit www.canadahouse.ca or the Company’s public filings at www.sedar.com.
