Ms. Deborah Stokes reports
LIVEWELL CANADA AND VITALITY SIGN MAJOR CBD SUPPLY DEAL WITH U.S. PRIVATE EQUITY FIRM
Livewell Canada Inc. has partnered with Vitality CBD Natural Health Products Inc., a Canadian CBD (cannabidiol) company, to sign a binding term sheet with Global Wellness Distributors LLC, a Nevada entity controlled by a U.S. private equity firm, for the supply of cannabidiol (CBD) wholesale products in North America.
Under the term sheet dated Oct. 27, 2018, which covers a period of 15 months with an option for four renewable one-year terms, Global Wellness commits to distribute CBD isolate, distillate and full spectrum CBD oil. At closing, Global Wellness will pay a $3-million (U.S.) deposit to the suppliers for the initial CBD supply. Commencing in January, 2019, Global Wellness will distribute a minimum quantity of 1,000 kilograms per month. Starting April, 2019, to March, 2020, the minimum quantity increases to 3,000 kilograms per month, for a total minimum quantity of 39,000 kilograms over the 15-month contract period.
Livewell and Global Wellness will work together to market and sell CBD products in North America, leveraging sales expertise and operational support in both organizations. The parties will co-share net profits on all sales. Based on current observable wholesale market pricing, CBD isolate pricing ranges between $6,500 (U.S.) to $10,000 (U.S.) based on the quality and purchase volume of the CBD purchase order.
All CBD products being supplied under the term sheet will be derived from industrial hemp and contain no more than 0.3-per-cent THC (tetrahydrocannabinol) content, making it suitable for the health and wellness market. As legalization and acceptance of CBD -- the non-psychoactive cannabis compound -- accelerates at a rapid pace globally, the demand for CBD products to improve health and wellness is exploding. Livewell has conducted major research on CBD and is investing in technologies for the extraction and isolation of CBD and other cannabinoids for use in prescription and consumer health products.
"For some time now Livewell has been quietly positioning itself to become a significant supplier of wholesale CBD to global companies looking to launch a multitude of CBD products. We recognized early on that if these companies were to enter the marketplace, a large-scale, reliable source of CBD would be required, and we have assembled the assets and partnerships to provide it," said David Rendimonti, president and chief executive officer of Livewell. "This is one of several partnerships we have developed that allows Livewell to generate significant revenues at a nominal cost and no outlay of capital."
The term sheet is subject to customary due diligence and execution of a definitive agreement by Nov. 30, 2018.
CBD is the same molecule whether it comes from cannabis or hemp. However, CBD derived from hemp is more economical to produce and has a larger global market potential due to less stringent regulations worldwide for hemp. The Brightfield Group of Chicago estimates the North American market for CBD from hemp could reach $22-billion (U.S.) by 2022. However, the global market could be significantly larger. Several European countries have already legalized hemp, and the World Health Organization has also recommended that CBD be descheduled across 194 nations.
About Livewell Canada Inc.
Livewell Canada is an innovative cannabis and hemp company focused on advanced research on CBD and other cannabinoids, as well as developing and distributing prescription and consumer health and wellness products. The company has greenhouses under construction located in Ontario and Quebec and is supported by business partners such as Canopy Growth and Canopy Rivers.
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