Mr. Chuck Smith of Dixie Brands reports
TRANSFORMATIVE JOINT VENTURE BETWEEN DIXIE BRANDS AND KHIRON LIFE SCIENCES BRINGS A PORTFOLIO OF HIGHLY RECOGNIZED CANNABIS-INFUSED PRODUCTS TO LATIN AMERICA AND KHIRON'S KUIDATRADEMARK COSMECEUTICAL BRAND TO THE FEDERALLY LEGAL U.S. CBD COSMETIC MARKET
Dixie Brands Inc. and Khiron Life Sciences Corp. have signed a binding letter of intent to establish a 50/50 joint venture to introduce a full line of cannabis-infused products to the Latin American market. Dixie will also manufacture and distribute Khiron's Kuida brand of cannabidiol (CBD)-based cosmeceuticals in the United States, targeting the growing Hispanic population. Completion of the JV is subject to TSX Venture Exchange approval.
By combining Dixie's market-ready portfolio of cannabis-infused products with Khiron's established footprint throughout Latin America, the companies aim to capture first-mover advantage and establish leadership in one of the world's fastest-growing cannabis markets. The agreement also creates a framework for the development of new products and brands tailored to Latin America, allowing Dixie and Khiron to take full advantage of opportunities resulting from cannabis legalization throughout the region.
Alvaro Torres, co-founder and chief executive officer of Khiron Life Sciences, stated: "This joint venture is a combination of two companies coming together to bring great brands with highly complementary products, distribution capabilities and expertise. The joint venture gives us important access to expand the reach of our Kuida cosmeceutical brand into the U.S. market, and by introducing a proven set of product formulations, we can more effectively leverage the infrastructure and relationships we are putting in place across Latin America."
Chuck Smith, president and chief executive officer of Dixie Brands, stated: "This joint venture will launch Dixie's portfolio of brands throughout Latin America and demonstrates the value and scalability of the product portfolio we have developed and marketed over the past nine years. Khiron is the clear leader in the Latin American cannabis space with an excellent operating team and a growing presence across the region. We look forward to aggressively supporting this push into Latin America as Dixie executes against its plan to expand into new international markets and build the leading global CPG cannabis company."
Joint venture details
Pursuant to the letter of intent, Khiron will operate the JV from its base in Bogota, Colombia, with responsibility for regulatory matters, cultivation, manufacturing and distribution. Dixie will contribute intellectual property including its extensive brand portfolio, product formulations and production processes. The two companies will collaborate on the development of new brands and products as appropriate for local Latin American markets.
Dixie's flagship Dixie Elixirs brand offers more than 100 SKUs spanning 15 product categories in the regulated infused tetrahydrocannabinol (THC) industry, with products currently sold in more than 1,000 regulated dispensaries in four U.S. states. Dixie's two hemp-derived CBD (cannabidiol) wellness companies, Therabis and Aceso, are focused on pet and human supplements which are sold through its e-commerce platform as well as traditional commercial retail distribution relationships expected to reach thousands of locations in 2019. Dixie will manufacture Kuida products in the United States and market them through its growing network of channels as it executes its expansion strategy.
Hillcrest Merchant Partners Inc. acted as adviser on the JV and, upon completion of the JV, will receive an advisory fee payable equally by the parties in shares of Dixie and Khiron.
Completion of the JV and the commencement of operations are subject to the execution of definitive agreements and receipt of all required regulatory approvals, including final acceptance of the TSX-V.
Latin American cannabis market
The Latin American region is among the world's fastest-growing cannabis markets as a number of countries move toward legalization. In Mexico, a global top-15 GDP country, the government has introduced legislation to permit medical and adult use for cannabis in 2019. According to Quintiles IMS, there are approximately 68 million potential patients in Latin America that could benefit from medical cannabis.
Khiron has entered the markets in Colombia, Peru, Chile and Mexico, and recently announced plans to enter Brazil and Uruguay through its proposed acquisition of NettaGrowth International Inc. Upon completion of the NettaGro transaction, Khiron will be present in markets which collectively represent more than 75 per cent of the total Latin American population of 620 million people. Kuida, its comprehensive portfolio of CBD-based skin and body care products for women, can be seen at the Kuida skin care website.
U.S. CBD market
The Hispanic population in the United States is estimated at almost 60 million and is among the country's fastest-growing demographic groups. CBD-based products have become increasingly popular in the U.S., and the legalization of hemp through the recently signed Farm Bill is helping to increase acceptance both by consumers and major retailers. Market research company Brightfield Group projects hemp-derived CBD sales in the U.S. of $22-billion by 2022. Kuida will be one of the first CBD brands specifically targeting Hispanic Americans.
Khiron and Dixie will jointly host a conference call for interested investors to discuss the details of today's announcement.
Thursday, Jan. 31, 2019
Time: 11:30 a.m. EST
Conference ID: 6794956
Webcast: see On24 website
Replay: 1-855-859-2056 or 416-849-0833
Passcode: 6794956; available for seven days following the call
Management of both companies will deliver prepared remarks, followed by an opportunity for investors to ask questions. The call will be supported by a slide presentation that will be made available on the live webcast and on the companies' investor websites. Following the call, an archive of the event can be accessed at both websites.
About Dixie Brands Inc.
Dixie Brands, through its licensed partners, has been formulating award-winning THC and CBD-infused products since 2009, and is expecting to double its manufacturing and distribution capabilities in 2019 in the U.S. as well as expand internationally, including Canada and Latin America. Dixie leads the global industry in the development, packaging design, product innovation and quality control for the commercial production of cannabis infused products. While Dixie started with a single flagship product, the Dixie Elixir (a THC-infused soda), it is now one of the industry's most recognized consumer brands, expanding to over 100 products across more than 15 different product categories representing the industry's finest edibles, tinctures, topicals and connoisseur grade extractions, as well as world-class CBD-infused wellness products and pet dietary supplements. Dixie's executive team has been instrumental in the formation of the cannabis industry for recreational and medicinal use, serving as founding members on several national regulatory and business-oriented industry organizations.
Life Sciences Corp.
Khiron Life Sciences is positioned to be the dominant integrated cannabis company in Latin America. Khiron has core operations in Colombia and is fully licensed in the country for the cultivation, production, domestic distribution, and international export of both THC (tetrahydrocannabinol) and CBD (cannabidiol) medical cannabis. In May, 2018, Khiron listed on the TSX Venture Exchange, becoming one of the first Colombian-based medical cannabis companies to trade on any exchange globally. Khiron is led by co-founder and chief executive officer Alvaro Torres together with an experienced executive team, and a knowledgeable board of directors that includes former President of Mexico, Vicente Fox.
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