Discover Wellness Solutions (WLNS.C) signed a memorandum of understanding (MOU) with Quad Play (QP) of Thailand to initiate a hemp business in Thailand, according to a press release.
A MOU is as binding as an IOU written on monopoly money, but it does represent a potential direction and prospect for the company. In this case, said direction includes the first step in what could be a joint business consumer-packaged goods venture for hemp extracts in the Asian market. Naturally, this extends beyond skin creams and cosmetics to include food and beverage, wellness and more.
“We view this arrangement as a first step for Discover Wellness’ global distribution strategy into the fast-growing food and beverage markets of Asia, a potential $5.8 billion market by 2024 according to Prohibition Partners. We are excited to be working with QP as our exclusive partner and leverage their deep relationships with traditional consumer packaged goods companies within Thailand and the broader Asian market,” said Peter Cheung, interim chief executive officer and chief financial officer.
Quad Play is a Thai cannabis and hemp play aiming at complete vertical integration. They’re involved in developing genetics, cultivation, extraction, tech and production of products for food, beverage and health for the domestic market. They intend to push out to the Regional Comprehensive Economic Partnership (RCEP) as well as global markets. Their subsidiary Jai Sai owns two medical clinics and will act as one of the main distribution channels for QP and Discover’s products.
Key points from the MOU
The QP and DWS intend to co-operate to develop the hemp industry in Thailand, effectively becoming a key producer of hemp-based products, for the medical, food, beverages, and cosmetic products markets, and also for domestic and export to RCEP and global markets.
- QP to become the exclusive supplier of DWS seeds in Thailand.
- The agreement will be subject to an initial order of 20,000 seeds.
- QP to pre-purchase 200,0000 seeds (value of US$200,000) for 4,000 shares in QP that represents a 4% equity interest on a fully diluted basis in QP (“Equity Interest”). The Pre-Purchase and Equity Interest is subject to a successful Trial Order.
- After the initial 200,000 seeds, QP to pay on a per seed basis and Discover Wellness has the option to convert those amounts into additional equity of QP to a maximum allowed under foreign ownership rules currently at 33%.
- Discover Wellness shall have the ROFR to acquire control of QP once regulations in Thailand allows for control by foreign companies.
Shares are flat, and WLNS closed today at $0.50.
Full disclosure: Discover Wellness is an equity guru marketing client.