WeedMD (WMD.V) signed an LOI to acquire craft cultivator CannTx Life Sciences in an all stock deal today, according to a press release.
CannTx has a production facility in Guelph, Ontario. They’re a cultivator that specializes in tissue culture and micropropagation techniques, craft cultivation, agriculture research and processing of new cannabis products.
“The ethos of WeedMD will always be rooted in quality cultivation. With the acquisition of CannTx, we will now be able to participate across all market segments with a strong portfolio of refined cannabis brands and products that consumers are moving towards. The CannTx team is nationally regarded as one of the premier leaders in genetics validation and more recently for its craft cultivation and solventless, full-spectrum products under the Royal City Cannabis Co. brand – highlighted as some of the best craft products in the country,” said George Scorsis, interim CEO and executive chair of WeedMD.
The terms of the LOI include WeedMD picking up and integrating CannTx business operations, including their business-to-business and adult-use businesses, which are presently operating as Steadystem Solutions and Royal City Cannabis. The new company will be in possession of one of the most comprehensive genetics banks in the industry.
“Since 2013, we’ve been saying that the key to success in the cannabis marketplace will be product differentiation through innovation and high standards of quality and consistency. We appreciate that our vision is warmly welcomed by the brand-focused leadership at WeedMD,” said Mike Abbott, president, CEO and co-founder of CannTx.
The purpose behind the preservation and protection of their genetic assets is so they can maintain some measure of consistency with their product lines to ensure that the customer has a reliable experience.
Three benefits
WeedMD’s production platform and sales channels are anticipated to have improved margins after the addition of craft brand Royal City Cannabis. CannTx’s Guelph, Ontario cultivator will be maintained as WMD’s specialty production site for rosin and hash processing, while their operations in Strathroy, Ontario, will be used for cultivation. The extraction facility in Aylmer, meanwhile, will be used to produce the oils, capsules, balms and vapes, and also as their medical cannabis and packaging centre.
Also, CannTx will be able to use their pre-existing international partnerships to help broaden WeedMD’s cultivation reach into the craft market to include the Americas and Europe. Included in these extra partnerships is the University of Guelph, and other institutions to help expand their network.
Lastly, CannTx brings their broad talent base and management team, which will add propagation, agricultural and science-based experience, as well as existing industry and client relationships. Also, their Steadystem Solutions program, which gathers tissues from donor plants and regenerates them in-vitro to reproduce and maintain cannabinoid and terpene profiles.
WMD is down 2.6% today, and presently trading at $0.28.
—Joseph Morton
