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Zenabis Partners with Farmako to Supply Mass Produced CBD Isolate in Canada and Medical Cannabis to Germany

Zenabis Partners with Farmako to Supply Mass Produced CBD Isolate in Canada and Medical Cannabis to Germany

VANCOUVER, BC, April 29, 2019 – Zenabis Global Inc. (TSX:ZENA) (“Zenabis” or the “Company”) is pleased to announce that it has entered into a binding term sheet for a three-year supply arrangement with leading German pharmaceutical research company Farmako GmbH (“Farmako”) for: (1) the supply of biosynthetically produced pure CBD isolate oil (99.9%) from Farmako to Zenabis for sale in Canada; and (2) the supply of European Union Good Manufacturing Practices (“EU GMP”) certified cannabis cultivated in Zenabis’ indoor facilities in Canada for sale by Farmako to the German medical market.

Andrew Grieve, Chief Executive Officer of Zenabis, stated, “While Zenabis is committed to producing both hemp- and cannabis-derived CBD products, we are thrilled to have signed the very first commercial agreement globally of its kind for the purchase of biosynthetic cannabinoids. We are purchasing the CBD isolates from Farmako at an incredibly low cost, which will allow us to tap into the rapidly growing Canadian CBD market by supplying products that will be priced much more competitively than current market offerings. This partnership will also enable Zenabis to supply high-quality medical cannabis into Germany, one of the largest medical cannabis markets in the world, thereby establishing our position in the European cannabis market.”

Farmako founder and chief executive officer, Niklas Kouparanis, said, “Signing the first deal in history to sell massproduced CBD isolate created by biosynthesis to Zenabis is a significant milestone for both Farmako and for the global Cannabis industry. Being the first European company to enter into an agreement to sell CBD isolates to the Canadian market puts Farmako at a significant competitive advantage within the global market and also supports us in bridging the gap between cannabis and pharmaceuticals. With our unique Continuous Bacterial Cannabinoid Biosynthesis (CBCB) method using our patented Bacterium Zynmomonas Cannabinoides®, we are able to produce nature-identical cannabinoids very effectively and at very low costs on a large scale.”

Highlights of CBD Isolate Agreement

  • Subject to Farmako’s production capacity, Farmako will supply Zenabis with 36,000 kg of CBD isolate over a three-year period, commencing in Q4 2019.
  • If Farmako and Zenabis are able to obtain EU export and Canadian import licenses for both the recreational and medicinal markets in Canada, then Farmako will supply the CBD isolate from its facility in Germany. If such licenses are not available, Farmako will construct a bioreactor at one of Zenabis’ existing licensed facilities in Canada.
  • Zenabis will offer the product through its Canadian medical and recreational brand distribution channels as well as in bulk for manufacturing purposes to other licensed producers. Zenabis will also have a right of first refusal to purchase any additional CBD isolate produced by Farmako for sale in the Canadian market.
  • Zenabis will pay Farmako an amount equal to Farmako’s marginal cash cost of production and will then split Zenabis’ profits from the sale of the product with Farmako (50% to Farmarko if the profit exceeds a specified threshold, otherwise 60% to Farmako).

Mr. Kouparanis continued, “In contrast to other biosynthetic methods, Farmako does not use yeast but a genetically modified tequila bacterium for CBD production. Our CBCB method has considerable advantages over other biosynthetic production methods, as it can produce pure CBD or other cannabinoid with extremely high levels of purity at a mass scale and at costs that are far below the current market price.”

Highlights of CBD Isolate Agreement

Subject to Zenabis fulfilling EU GMP certification requirements, Zenabis will supply Farmako with up to 5,000 kg per year of indoor EU GMP certified cannabis for the medical market. Shipments are expected to commence in Q4 2019 and will include, but not be limited to, dry flower, soft gels and sublingual sprays.

Germany’s medical cannabis laws were introduced in March 2017 and the country is poised to become one of the largest federally regulated medical cannabis markets in the world. Without domestic production, the country must import supply to meet rapidly growing demand and Zenabis is now positioned to secure market share through its supply arrangements with Farmako.

About Farmako GmbH

Farmako GmbH is a research-based pharmaceutical company based in Frankfurt. The company focuses on the distribution of pharmaceutical cannabis and research in order to catch up on the research backlog in the field of pharmaceutical cannabis. Farmako plans to become a vertically integrated market leader in every European country in this market with the appropriate legal basis. Farmako has branches in Germany, Denmark and the United Kingdom. After its market entry in March 2019, Farmako already is one of the leading independent European distributors for pharmaceutical cannabis.

About Zenabis

Zenabis is a Canadian publicly listed licensed cultivator of medical and recreational cannabis. The Company was formed in January 2019 through the combination of Bevo Agro Inc., one of the largest propagation businesses in North America; and Sun Pharm Investments Ltd., a large privately held licensed cannabis producer with established medical and recreational cannabis brands and distribution. The Company owns six state-of-the-art indoor and greenhouse facilities across Canada, four of which are intended for cannabis cultivation. If all four such facilities are fully built out and converted
to cannabis production, they would have a design capacity to yield approximately 479,300 kg of dried cannabis annually. The remaining two facilities are currently generating revenue in the propagation and floral business and have applied for industrial hemp cultivation licenses.

The Company benefits from a management team that has growing expertise developed over 30 years in one of the largest plant propagation businesses in North America, as well as extensive sales, marketing and distribution experience. These strengths have been key to Zenabis’ success in securing supply agreements and arrangements with eight Canadian provinces and one territory, where the Company’s recreational products are sold both online and in store through government-owned cannabis stores. In addition, the Company has signed agreements with Pharmasave and Shoppers Drug Mart to supply products to their medical customers.

Note: Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Information

This news release contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information may include, among others, statements regarding the future plans, costs, objectives or performance of Zenabis, or the assumptions underlying any of the foregoing. In this news release, words such as “may”, “would”, “could”, “will”, “likely”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate” and similar words and the negative form thereof are used to identify forward-looking statements. In this news release, forward-looking statements relate, among other things, to: our partnership with Farmako and the expected benefits resulting therefrom, the satisfaction of conditions to the supply arrangement, including the obtaining of EU GMP certification for our facilities in Delta, British Columbia and Atholville, New Brunswick, the execution of the obligations under the binding term sheet, our intention to enter international cannabis markets, and expectations with respect to international cannabis markets. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether, or the times at or by which, such future performance will be achieved. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur. Forward-looking information is based on information available at the time and/or management’s good-faith belief with respect to future events and are subject to known or unknown risks, uncertainties, assumptions and other unpredictable factors, many of which are beyond Zenabis’ control. These risks, uncertainties and assumptions include, but are not limited to, those described in the Company’s shelf prospectus dated April 9, 2019, a copy of which is available on SEDAR at www.sedar.com, and could cause actual events or results to differ materially from those projected in any forward-looking statements. Furthermore, any forward-looking information with respect to available space for cannabis production is subject to the qualification that management of Zenabis may decide not to use all available space for cannabis production, and the assumptions that any construction or conversion would not be cost prohibitive, required permits will be obtained and the labour, materials and equipment necessary to complete such construction or conversion will be available. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Zenabis does not intend, nor undertake any obligation, to update or revise any forward-looking information contained in this news release to reflect subsequent information, events or circumstances or otherwise, except if required by applicable laws.


For more information, visit: https://www.zenabis.com.

Media Relations

Investor Relations
Shobana Thaya
Zenabis Global Inc.

Andrew Grieve
Chief Executive Officer