Aleafia Health Inc. announced that its wholly-owned subsidiaries, Canabo Medical Corporation and GrowWise Health Limited, have closed a transaction with Myconic Capital Corp. whereby the Vendors sold certain of their respective clinic assets to Myconic. Additionally, Canabo has agreed to continue to staff and generally operate the clinics for the benefit of Myconic for a period of ten years, through a Clinic Services and License Agreement between Canabo and Myconic, ensuring that there will be no interruption to medical services offered to existing patients. Pursuant to an Asset Purchase Agreement, the Vendors sold to Myconic certain clinic leases, inventory, equipment and contracts, all relating to clinic operations (which excludes all patient records).
As consideration for the Purchased Assets, Canabo and GrowWise were issued and delivered an aggregate of 7,000,000 common shares in the capital of Myconic, issued at an issue price of $1.50 per share, in satisfaction of a purchase price of $10.5 million, (the “Consideration Shares”) on the closing of the Transaction. The Consideration Shares are subject to a contractual lockup whereby the Consideration Shares will be released and become freely tradeable in several tranches over a period of 12 months following closing. No finder’s fees are payable as a result of the Transaction.
As previously announced due to the COVID-19 pandemic, since March 2020 the Company’s clinic network has conducted 100 per cent of cannabis patient consultations virtually and will continue to provide best-in-class cannabinoid therapy to patients under the virtual-only model through the clinics and other Purchased Assets licensed from Myconic.
Under the Services Agreement, Canabo will provide such services as are necessary to maintain the operation of the Clinics in respect of medical cannabinoid education, therapy and treatment substantially consistent with past practice (the “Services”). Canabo will pay Myconic a licensing fee for the use of the Purchased Assets in connection with the Services as it will retain certain third party revenue generated from the performance of the Services. Additionally, Canabo will receive a fee from Myconic for performing the Services.
Myconic intends to expand the services offered at the purchased clinics to include a broader scope of mental health treatments, including ketamine-assisted psychotherapy.
In addition, Aleafia Health and Myconic have entered into a nomination rights agreement, which provides Aleafia with, among other things, the right to nominate or appoint one of the five members of Myconic’s board of directors following closing (subject to customary eligibility criteria, applicable securities laws and stock exchange rules) and will be entitled to exercise this right at each of annual meetings of shareholders provided it (or its affiliates) continues to own, control or direct at least 1,000,000 common shares of Myconic.
Aleafia Health is a vertically integrated and federally licensed Canadian cannabis company offering cannabis health and wellness services and products in Canada and in international markets. The Company operates medical clinics, education centres and production facilities for the production and sale of cannabis.