AgraFlora Organics International Inc (CSE:AGRA) (OTCMKTS:AGFAF) has closed the acquisition of Candian cannabis company Sanna Health Corp, originally announced back in December.
Sanna Health, based in Toronto, operates a 16-acre, 27,000 sq ft Health Canada licensed cultivation and processing space. The company holds an option to expand its production to 89,000 sq ft in addition to more commercial-industrial space.
AgraFlora acquired all of the issued and outstanding shares of Sanna in exchange for 76,666,666 shares.
Sanna has ethanol extraction equipment installed on-site and is negotiating high-margin agreements to process upwards of 1,000 kilograms of hemp biomass per month, making it primed to generate sustainable cash flow, the company said.
AgraFlora forecasts, upon receipt of the required licence amendment, that Sanna’s extraction facility will boast annual extraction capacity of 250,000 kilograms of dried cannabis and hemp biomass, much of which will be supplied by the Sanna’s 88-acre outdoor cannabis grow. That operation is located less than 90 minutes from its Toronto headquarters, streamlining the logistics and reducing transportation costs.
The company plans to submit its affirmation of readiness and video evidence package for its initial zone one 13-acre outdoor grow in southwestern Ontario immediately following the closing of the share exchange, in time for the 2020 outdoor cultivation season.
Sanna plans to produce up to more than 1,000 kilograms per acre of quality low-cost cannabis flower, with a per gram unit contribution under $0.10.In addition, Sanna’s planned zone two outdoor expansion will add 75 more acres cultivation. Once licensed, the area us expected to yield more than 75,000 kilograms of dried cannabis per harvest.
The company’s cultivation concepts include:
- Proprietary soil/nutrient monitoring and plant health monitoring solutions
- Consistent delivery of ideal primary, secondary and micronutrients
- Evaluation and comprehension of the rhizosphere and its effect on inputs and yield
- Creation of crops that are more resistant to pests and disease
- Manipulation of nutrient and substrate conditions to drive plant health and yield
On the distribution front, Sanna has memorandums of understanding in place with established cannabis retailers, including Canna Cabana by High Tide Inc and Delta 9 Cannabis. Together, Canna Cabana and Delta9 will boast 45 licensed brick-and-mortar retail locations across Canada by the first quarter of 2020.
Sanna also plans to pursue formal supply agreements with those retailers. Leveraging its medical sales license, Sanna anticipates the launch of its direct-to-patient ecommerce site during the second quarter.
Ultimately, Sanna plans to construct a 1,500-square-foot dispensary at its Toronto location.
AgraFlora owns an indoor cultivation facility in London, Ontario, as well as an edibles manufacturing facility in Winnipeg, currently being retrofitted.
The company is also a joint venture partner in Propagation Services Canada Inc, which operates a 2.2 million-square-foot greenhouse complex in Delta, British Columbia.
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