Medcolcanna Organics Inc. Announces it Has Entered Into a Distribution Agreement, Has Secured Financing With Greenstein Capital Ltd.

BOGOTÁ, Colombia, July 20, 2020 (GLOBE NEWSWIRE) -- Medcolcanna Organics Inc. (“Medcolcanna”, “MCCN” or the “Company”) (TSXV: MCCN), a leading Colombian and globally integrated cannabis company, is pleased to announce that it has entered into a distribution agreement with Greenstein Capital Ltd. (“Greenstein” or “GC”), a private Maltese company. This agreement, which includes the distribution of a minimum quantity of 1,000 kg of active cannabinoid ingredients per year, will see MCCN products commercialized in Europe. The companies have also agreed on immediate financing to MCCN via a share issuance and participation in a debenture offering more particularly described below. MCCN and GC have also committed to continue ongoing discussions towards a corporate transaction in the future.

Distribution Agreement

The distribution agreement entered into with Greenstein Trading Ltd. (“GT”), a subsidiary of GC, consists of transferring cannabinoid ingredients to GT on a COGS basis for Active Pharmaceutical Ingredients (“APIs”) and bulk products, and a COGS plus 25% price on all finished products. The agreement includes a profit-sharing mechanism stating that the final sale price minus the transfer price from MCCN to GT will generate profit to be shared equally between the parties.

The agreement also provides a minimum purchase of 1,000 kilograms of product per year (subject to EUGMP conformity) or a penalty of 50% of average cost of production to be paid by GT to MCCN for quantities unsold.

Financing

The share subscription is being via the issuance of shares at a value of CAD $0.08 per share, for a total amount of CAD $800,000 and a total issuance of 10,000,000 common shares in the capital of the Company (“Common Shares”).

In addition, GC has subscribed for CAD $800,000 worth of convertible secured debentures (the “Debentures”). The Debentures will be convertible into Common Shares on the following terms: the Debentures will be convertible into Common Shares at a price of $0.20 per share and will have a term of two (2) years from the date of issuance, with interest payable at expiration date of fourteen percent (14%) per annum (simple not compounded), payable in cash or shares. The Debentures will be subject to earlier redemption by the Company in the event the Common Shares are trading on the facilities of the TSX Venture Exchange (or such other stock exchange on which the Common Shares may then be trading) at a volume weighted average trading price at or above $0.40 per share for a period of not less than ten (10) consecutive trading days.