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Ventura Cannabis (VCAN) Executes LOI to Divest Corona Detox Center for $1.4M in Cash; VCAN to Retain 10-year Rights to Exclusively Supply All Cannabis Products for Opioid Treatment to Detox Center’s Patients
LOS ANGELES, May 14, 2019 (GLOBE NEWSWIRE) — Ventura Cannabis and Wellness Corp. (CSE:VCAN) (“Ventura Cannabis”, “VCAN”, or the “Company”) is pleased to announce it has entered into a non-binding Letter of Intent (LOI) for the disposition of one of its past business units—the inpatient/detox addiction treatment business unit located in Corona, California as it focuses its resources and capital from the disposition on acquiring and developing branded cannabis revenues in the California market.
Ventura Cannabis recently signed a binding purchase agreement to become a vertically-integrated, California-based branded product cannabis company.
The management team has had significant success in accomplishing the identified three most pressing milestones:
- Securing, through acquisition or application, three types of state and city-issued licenses: a manufacturing license, a distribution license and a cultivation license in California. – Announced May 8th 2019; acquisition of Cannastar
- Closing the previously announced acquisitions which include dispensing licenses, totaling an estimated $2.1 million per year in annual cannabis revenues. * – Announced May 6th, 2019; Closed Amberlight
- Divesting the two inpatient/detox addiction treatment centers while retaining the rights to supply cannabis to patients to generate additional cash to invest in cannabis assets. – Today’s announcement
Under the LOI, Ventura Cannabis will generate a total of $1,400,000 over a three-year period in payments from the arms-length buyer, which is the current operator of the facility. Importantly, Ventura Cannabis will retain the rights to be the exclusive supplier of cannabis products for addiction treatment to past, current and future patients of the inpatient/detox business in Corona, California. Ventura Cannabis will also continue to hold the real estate associated with the business, retaining an additional $419,000 in annual cash flow. The LOI does not contemplate the purchase of the real estate.
“I am pleased we are executing the necessary steps to achieve our three main milestones,” said Jacob Gamble, CEO of Ventura Cannabis. “This deal gives us more cash to quickly reach our milestones. While this is a non-binding LOI, Chris Heath, our Executive Director, has a long-standing relationship with the buyer, in that she was the operator of the center for many years. So I am confident we will get to a binding contract soon.”
“We get the best of both worlds with this deal,” continued Mr. Gamble. “We get additional cash to execute on our California-based cannabis branded product strategy while still retaining the exclusive rights to the potential revenue stream from selling cannabis to opioid addicts during and after treatment at the Corona center for 10 years. We have started looking at potential buyers for our Hollywood, California business with similar terms, specifically with a focus on retaining exclusive supply rights to cannabis sales to opioid addicts.”
“We continue to see deals from our growing pipeline of deal flow in California. I have asked Mr. Heath to take a more active role in the dispensary side of acquisitions as he has vast expertise with the seller and operator profile,” concluded Mr. Gamble. “We also are working through the many steps to close the deals we have under contract, and I am hoping soon we will get our approvals to close.”
As part of the effort to finalize the sale of the remaining portion of its past addiction treatment business, the Company has posted restated 2018 audited financial statements on SEDAR, with quarterly statements to follow. The Company has reclassified certain transactions; the management team believes the resulting restatement is inconsequential with respect to the financial position of the Company and it aides in the final disposition of its remaining past inpatient/detox business unit in Hollywood, California.
For more information contact:
Ventura Cannabis and Wellness Corp.
CEO and Executive Director
Certain statements contained in this presentation constitute “forward-looking information” as such term is defined in applicable Canadian securities legislation. The words “may”, “would”, “could”, “should”, “potential”, “will”, “seek”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, “confident” and similar expressions as they relate to the Company. Such statements reflect the Company’s current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions. The forward-looking information included are made as of the date of this release and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. VCAN holds or is acquiring marijuana assets in the United States. Previously disclosed acquisitions are still subject to closing. Marijuana is legal in each state VCAN is looking to operate, however marijuana remains illegal under US federal law and the approach to enforcement of US federal law against marijuana is subject to change. Shareholders and investors need to be aware that adverse enforcement actions could affect their investments and that VCAN’s ability to access private and public capital could be affected and or could not be available to support continuing operations.