Mr. Malcolm Davidson reports
SPEAKEASY ANNOUNCES AN EXTRACTION AGREEMENT WITH RC FRONTIER LABS
Speakeasy Cannabis Club Ltd. has entered into an extraction agreement and a consulting agreement with RC Frontier Labs Ltd. effective Jan. 8, 2021.
The agreements bring marketing, processing equipment, intellectual property, and years of extraction and formulation experience to the Speakeasy processing facility:
- RC Frontier Labs brings all equipment necessary to allow Speakeasy to enter the cannabis concentrate market immediately.
- Speakeasy's outdoor crop is perfectly suited to create high-quality value-added products and with its low cost, giving Speakeasy an advantage in the market.
- RC Frontier Labs brings years of experience in the legal extraction market.
Founder Marc Geen stated:
"The ability to perform top-notch extractions and create industry-best value-added products takes more than just the right equipment; it's as skill dependent as growing world-class cannabis. Years of practice, trial and error, adjustments, and corrections until near perfection is achieved. Together with the right equipment, the right techniques and knowledge base, incredible products can be created."
Increase margin and product portfolio
Mr. Geen further stated: "Not all genetics are created equal; the company's outdoor grow varieties were selected with concentrates in mind. Ladened with all ingredients needed to make world-class concentrates, the outdoor crop is both low cost and highly potent. The cost savings of low-cost input material is multiplied when making concentrates as it takes many grams of input material to make a single gram of concentrate, leveraging Speakeasy's input material cost per gram advantage. When you combine the right equipment, the right team and the perfect material to make it from, good things will happen."
Expedite time to market
Entering into the agreements with RC Frontier Labs is expected to save the company significant upfront cost and years of learning. The company's focus has been on growing high-quality cannabis and management believes it has all the traits necessary to be among the best in the industry at cultivation and growing flower, and combined with the relationship with RC Frontier Labs, it further believes the company will be among the best at producing value-added cannabis products. Speakeasy has a significant amount of product that was grown at an industry-leading low cost, and as such, entering into the value-added markets with such a large advantage gives Speakeasy a leg up on many in the industry.
Mr. Geen stated:
"Moving our significant volume of material through one channel isn't realistic; however, moving it through multiple channels, flower, prerolls, edibles, topicals and multiple forms of concentrates is. Speakeasy does not have to outsource any of the materials or processes that it requires to manufacture its products; it is all done in-house. Sending material to other companies to have them process it eats away at the bottom line, having an agreement with RC Frontier Labs, we are now a one-stop shop."
The company has agreed to pay RC Frontier Labs a total fee of $1.75-million for the provision of services under the consulting agreement. RC Frontier Labs will develop and promote brands during the next 12 months including the Speakeasy brand, which will be used exclusively by and for Speakeasy Cannabis Club. Brands are an incredibly important part of any business and have become key in the cannabis industry.
Mr. Geen stated: "Speakeasy has worked incredibly hard to achieve goals we set that were necessary to make us a sustainable business with a bright future. It is time for everyone to know what we have accomplished, to see what we've done and watch what we continue to do here. We are different, unique [and] outstanding, and we have everything in place to prove it. After creating incredible videos and content that capture and display the heart and soul of Speakeasy,
will continue to display who we are by getting the word out."
Subject to compliance with applicable laws, including the policies of the Canadian Securities Exchange, the consulting fee shall be satisfied through the issuance of common shares in the capital of the company (at a deemed price of 47 cents per share), resulting in the issuance of an aggregate of 3,723,404 common shares.
The agreements are considered to be related-party transactions within the meaning of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions as a result of Mr. Geen being a shareholder and a director of RC Frontier Labs. Mr. Geen is an insider of the company as a result of holding in excess of 10 per cent of the company's outstanding common shares. The company is relying on applicable exemptions from the valuation and minority security holder approval requirements available under sections 5.5(a) and 5.7(a), respectively, of MI 61-101 in respect of such related-party transaction on the basis that the fair market value of the transaction does not exceed 25 per cent of the company's market capitalization.
About Speakeasy Cannabis Club Ltd.
Speakeasy Cannabis holds a cultivation, processing and sales licence issued by Health Canada under the Cannabis Act. Speakeasy owns 290 acres of land in Rock Creek, B.C., and leverages five generations of farming experience in British Columbia, as well as its favourable location to grow and process high-quality cannabis products at low cost. Speakeasy cultivates small-batch, high-quality craft cannabis at scale in its 63,200-square-foot indoor cannabis complex and is approaching completion of its harvest of its 60-acre outdoor field. Total yearly production of cannabis flower and biomass is projected to be in excess of 70,000 kilograms per year.
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