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Entourage 26/09/2019

MMJ Group Invests CAD6m in WeedMD Inc.

MMJ Group Holdings Limited (ASX: MMJ) (“MMJ”), an Australian-listed company that specialises in managing a portfolio of investments along the cannabis value-chain, has invested CAD6m in the Canadian-listed company WeedMD Inc. (TSX-V:WMD) (“WeedMD or WMD”).

“This is another example of MMJ’s strong market and financial discipline identifying opportunities and bottlenecks in the cannabis value-chain in markets and acting quickly,” MMJ’s Chairman, Mr Peter Wall, said.

Mr. Wall stated, “WeedMD was an opportunity for MMJ to invest in a highly attractive manner and which allows WeedMD to capitalise on being sufficiently funded for current cultivation operations and to build out its extraction facility. WeedMD has executed its business plan quite well and has now expanded into outdoor cultivation and has well capitalized plans to become a provider of extracted cannabis products.”

MMJ worked with its specialist management company, Embark Ventures, to evaluate the investment opportunity and WeedMD is the third investment made for MMJ.

WeedMD Inc. (the Company) is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer of cannabis products for both the medical and adult-use markets. The Company owns and operates a 158-acre state-of-the-art greenhouse and outdoor facility located in Strathroy, ON. The Company also operates CX Industries, a wholly-owned subsidiary of WeedMD Inc. CX Industries operates out of the Company’s fully-licensed 26,000 sq. ft. Aylmer, Ontario production facility which specializes in cannabis extraction and processing. WeedMD has a multi-channeled distribution strategy that includes selling directly to medical patients, strategic relationships across the seniors’ market and supply agreements with Shoppers Drug Mart as well as six provincial distribution agencies where WeedMD’s adult-use brand Color Cannabis is sold. WeedMD had a market capitalisation of CAD153m1.

MMJ’s investment consists of CAD6m in 8.5% unsecured convertible debenture units issued by WeedMD which may be converted into 3.75m shares within three years.

MMJ has also secured the right to make further investments in WeedMD through warrants that allow MMJ to acquire an additional 3.75m shares for CAD1.80 each for a period of 3 years.

Settlement of the WeedMD investment is expected on or about 26 September 2019 and will be funded from MMJ’s existing cash reserves of AUD20m.

A copy of the WeedMD’ press release in respect of the closing of the offering of debentures is attached here.

1 As at 25 September 2019 AEST

Important Notice

This announcement contains reference to certain intentions, expectations, future plans, strategy and prospects of MMJ. Those intentions, expectations, future plans, strategy and prospects may or may not be achieved. They are based on certain assumptions, which may not be met or on which views may differ and may be affected by known and unknown risks. The performance and operations of MMJ may be influenced by a number of factors, many of which are outside the control of MMJ. No representation or warranty, express or implied, is made by MMJ, or any of its directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. Given the risks and uncertainties that may cause MMJ’s actual future results, performance or achievements to be materially different from those expected, planned or intended, recipients should not place undue reliance on these intentions, expectations, future plans, strategy and prospects. MMJ does not warrant or represent that the actual results, performance or achievements will be as expected, planned or intended. Nothing in this material should be construed as either an offer to sell or a solicitation of an offer to buy or sell securities. It does not include all available information and should not be used in isolation as a basis to invest in MMJ. This document does not constitute any part of any offer to sell, or the solicitation of an offer to buy, any securities in the United States or to, or for the account or benefit of any “US person” as defined in Regulation S under the US Securities Act of 1993 (“Securities Act”). MMJ’s shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to any US person without being so registered or pursuant to an exemption from registration including an exemption for qualified institutional buyers.

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