WeedMD Inc., a federally licensed producer and distributor of medical-grade cannabis is pleased to announce it has entered into a definitive agreement to acquire all of the issued and outstanding shares of renowned craft cultivator CannTx Life Sciences Inc. in an all-stock transaction (the “Acquisition”). The Acquisition, which is subject to CannTx shareholder approval as well as other customary closing conditions, is expected to close in late August 2021. Upon closing, CannTx, which operates out of its licensed production facility in Guelph, Ontario will continue doing business as a wholly owned subsidiary of Entourage.
Entourage is also pleased to announce it has changed its corporate name from “WeedMD Inc.” to “Entourage Health Corp.” Visit our new website here, expected to be live at market opening on or about July 16, 2021.
In connection with the rebranding, the Company’s common shares (“Common Shares”), convertible debentures maturing September 25, 2022 (the “Debentures”), Common Share purchase warrants expiring September 25, 2022 (the “2022 Warrants”), and Common Share purchase warrants expiring March 12, 2023 (the “2023 Warrants”), are expected to commence trading on the TSX Venture Exchange (the “TSXV”) under their respective ticker symbols “ENTG”, “ENTG. DB”, “ENTG.WT”, and “ENTG.WT.A”, at market opening on or about July 16, 2021.
“This is an exceptional period of growth and opportunity for our Company. Following a year of reflection, transformation and evolution, today – alongside CannTx – we are emerging as a differentiated cannabis operator under Entourage Health which continues to uphold a value system rooted in quality production and consumer excellence,” said George Scorsis, Interim CEO and Executive Chairman, Entourage Health Corp. “With this acquisition, we will partner to deliver innovative, consistent products and cannabis experiences to a growing Canadian consumer base, utilizing proprietary genetics, IP, and led by the finest industry experts. With over 2,000 current product listings across the nation, near-perfect fulfilment rates in all channels for our award-winning products, and a reach that covers 90% of the market, by end of summer we will be present in all segments including premium craft production. This growth strategy will solidify our business, and put us on a rapid trajectory to reaching our profitability goals by enhancing our existing practices and adding accretive products to our portfolio.”
“We are thrilled to be adding our craft methods, growth vision and brands as we transition together into the aptly named Entourage,” said Mike Abbott, President, CEO and Co-Founder of CannTx. “As long-time peers and partners, we are aligned in our cultivation and production philosophies anchored by a purpose-built infrastructure that will expand product distribution to more Canadians seeking cannabis produced with passion and heart. The data is clear – cannabis consumers value quality and reliability. Smaller producers and micros are taking greater market share because consistent, quality production matters. The commercial value of our industry learnings alongside the talent, assets, and capabilities that our merged company now possesses is unparalleled and we are excited to move forward united as one team.”
Upon closing, the Acquisition will create an entity that will house one of the most comprehensive genetic banks in the industry, further strengthening the Company’s already robust cultivation and high-margin processing operations for new strain and product expansion, which now includes hash and rosin production. In addition to its tissue culture, micropropagation and craft cultivation specialties, CannTx will fold in its B2B Steadystem Solutions and adult-use craft brand Royal City Cannabis Co. to the brand portfolio that includes Color Cannabis, Saturday Cannabis, Starseed Medicinal and Mary’s Medicinals Canada.
Over the past year, Entourage has been collaborating with CannTx to preserve the Company’s genetic assets to consistently and perpetually grow the same great products on which its award-winning reputation is built. CannTx is currently expanding Entourage’s genetics bank and cultivars’ lifecycle with its rejuvenation techniques and genetic assets storage.
Benefits of the Acquisition to Entourage and CannTx:
- Complementary Operations and Premium Craft Brand: Entourage’s low-cost southwestern Ontario production platform and robust sales channels are expected to generate improved margins with the addition of craft brand Royal City Cannabis Co. which was recently added to a select group of “Craft Cultivators” by the Ontario Cannabis Store. CannTx’s indoor craft cultivation operations in Guelph, Ontario will be maintained as the Company’s craft and specialty production site for rosin and hash processing. Entourage’s low-cost, state-of-the-art greenhouse and outdoor cultivation operations housed in Strathroy continues to be the primary cultivation hub. Its Aylmer extraction facility is maintained as its primary biomass processing facility where oils, capsules, balms and vape products are currently produced and also serves as its medical cannabis and retail packaging centre.
- Further Strengthens Distribution Capabilities: In addition to expanding its cultivation footprint into the craft market, Entourage will leverage CannTx’s international relationships to market new and innovative consumption methods to emerging cannabis markets in the Americas and Europe. Additionally, CannTx’s affiliation with the University of Guelph and other learning institutions will broaden Entourage’s network for research and development. The Company has the necessary infrastructure to meet emerging industry demand, including an expanding medical cannabis portfolio and the rapidly growing retail environment in 2021.
- Broadened Technical Expertise and Proprietary Assets: With its limited overlap in talent, CannTx’s management team will bring extensive propagation, agricultural, and science-based experience, as well as strategic industry and client relationships. Its proprietary Steadystem Solutions program collects tissues from donor plants and regenerates them using an in-vitro platform to re-produce and maintain historical cannabinoid and terpene profiles, while removing bacterial, fungal, entomological, and viral pathogens and is a valuable and unique asset. These strengths will be complementary to Entourage’s cultivation and product-focused skillsets.
Acquisition and Transaction Summary
Upon closing of the Acquisition, Entourage will issue up to 62,500,000 Common Shares to CannTx shareholders, subject to adjustment in accordance with the Acquisition Agreement. The Acquisition values CannTx at up to approximately $17.5 million based on an Entourage Common Share price of $0.28 per share. Upon closing of the Acquisition, an aggregate of approximately 3,571,000 Common Shares will be held in escrow to secure indemnification and other obligations undertaken by certain vendors in the Acquisition Agreement.
The directors, officer and certain shareholders of CannTx, who collectively beneficially own, or exercise control or direction over, 21,717,668 CannTx common shares (“CannTx Shares”) (representing approximately 48.1% of the issued and outstanding CannTx Shares), have entered into voting support agreements pursuant to which each has agreed to vote their CannTx Shares in favour of the Acquisition and all other matters in favour of the Acquisition. Concurrent with the closing of the Acquisition, it is expected that two nominees from CannTx shall join the Entourage board of directors. In addition, certain members of CannTx’s management will join the Entourage management team. Completion of the Acquisition remains subject to the satisfaction or waiver of all closing conditions, including the receipt of all required regulatory approvals. The Acquisition is expected to close in late August 2021.
About Entourage Health Corp.
Entourage Health Corp. (previously known as WeedMD Inc.) is the publicly traded parent company of WeedMD RX Inc. a licence holder producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a 158-acre state-of-the-art greenhouse, outdoor and processing facility located in Strathroy, ON as well as a fully-licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction.