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The Valens Company Enters Australia’s Rapidly Expanding Cannabis Market with Five Year Distribution Agreement with Country’s Largest Distributor
- Landmark agreement provides The Valens Company with strategic access to the second largest cannabis market outside of North America.
- Under the terms of the five-year agreement, The Valens Company becomes a preferred supplier to Cannvalate, a leading authority in the Australian medical cannabis community with the largest cannabis distribution platform in the country.
- Partnership provides the Company the platform to establish initial operations, pursue required licensing, and bring Valens’ high quality, innovative, oil-based products to a growing medical patient base and broader consumer categories as the market evolves.
KELOWNA, BC, May 14, 2020 /PRNewswire/ – Valens GroWorks Corp. (TSX: VLNS) (OTCQX: VLNCF) (the “Company” or “The Valens Company”), a global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products, announced today that it has signed a distribution agreement with Cannvalate Pty Ltd. (“Cannvalate”), Australia’s largest medicinal cannabis distributor and clinical research organization, with a current estimated market share of almost 50% of cannabis prescriptions in the country.
The five-year, non-exclusive agreement is based on an asset-light revenue generating pay for performance model, providing Cannvalate achieves milestones based on certain financial targets and facility construction and licensing timelines outlined in the agreement. Under the terms of the agreement, The Valens Company is also in the process of finalizing a long-term lease on a property in Australia with an independent third party. This is expected to be built out by the landlord as a small-sized extraction and manufacturing facility designed to be scalable, forming the hub of The Valens Company’s operations in the country. Construction on the facility is expected to commence on signing the lease and is expected to be fully operational halfway through 2021, subject to applicable licensing and regulatory approvals.
In the near term, The Valens Company is expected to monetize the agreement with Cannvalate through shipments of a broad range of products from its facility in Canada to Australia. As such, the terms of the agreement require minimal upfront capital investment by The Valens Company. The Company is targeting initial revenue from this agreement in Q3 2020 subject to receiving the necessary import and export permits.
“This partnership provides Valens with strategic access to Australia’s strong and fast-growing cannabis market,” said Tyler Robson, CEO of The Valens Company. “With a proven track record, strong knowledge of the local market, and a leading distribution platform in Australia, Cannvalate is an excellent partner for us to build our presence in this pivotal hub with significant long term growth opportunity.”
“The agreement allows us to maximize incremental revenue potential, while spending minimal capital upfront and scaling our operations as the opportunity expands,” added Jeff Fallows, President of The Valens Company. “Australia’s medical patient base, similar to the early stages of medical patient growth in Canada, offers an attractive return for our shareholders with potential upside as this also positions us strongly in a market that is expected to ease regulations around CBD products in early 2021.”
“The Australian market is the fastest growing, pure-play medicinal cannabis market in the world and is unique in that oil-based derivatives represent over 95% of the total products sold. This opportunity provides the platform for The Valens Company to become the primary extractor and contract manufacturer for licensed producers throughout Australia and Asia-Pacific,” said Dr. Sud Agarwal, CEO of Cannvalate.
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