Full Press Release Details
PORTUGAL-BASED HOLIGEN, SECURING A CANNABIS SECTOR LEADERSHIP POSITION IN EUROPE, THE MIDDLE EAST AND AFRICA (EMEA) WITH EU GMP MARKET
Transformational deal will add prized cultivation,
manufacturing and distribution assets to accelerate Akanda's seed-to-patient model and satisfy demand in fast-growing European
Akanda will have immediate EU GMP certification,
a significantly expanded product portfolio, and an award-winning genetics library
April 20, 2022: International medical cannabis company Akanda Corp. ("Akanda" or the "Company")
(NASDAQ: AKAN) today announced it has entered into a definitive agreement to acquire 100% of the issued and outstanding shares of Holigen
Limited ("Holigen") from The Flowr Corporation ("Flowr") (TSXV: FLWR, OTC: FLWPF). The proposed acquisition will
significantly accelerate Akanda's seed-to-patient business model in the EMEA region, improving the Company's ability to meet
growing demand for medical cannabis and positioning it for adult use markets as regulations evolve.
The highly complementary acquisition of Holigen,
the owner of a Portugal-based cultivator, manufacturer and distributor, provides Akanda with both the capacity and route-to-market for
delivering first-party and third-party ("1P/3P") EU Good Manufacturing Practice (GMP) certified medical cannabis to legal
EU markets through an efficient vertically integrated model. Holigen's wholly owned subsidiary RPK Biopharma Unipessoal, Lda ("RPK"),
consists of a high-quality 20,000 square foot indoor EU GMP certified grow facility located near Lisbon (in Sintra) dedicated to the
cultivation of high-THC premium cannabis as well as a large seven million square foot (180+ acres) outdoor facility located two hours
south in Aljustrel. Combined, the Company believes these facilities will provide the flexibility of capacity in Portugal to produce two
tonnes of 1P premium indoor cannabis, over 100 tonnes of 1P outdoor cannabis, and over eight tonnes of 3P manufacturing capacity annually.
Holigen's prized purpose-built indoor grow
facility is the only one of its kind that can produce EU GMP medical cannabis equivalent to the recreational grades available in North
America. Pursuant to the terms of the acquisition, Akanda will also benefit from the genetics library available from Flowr, including
its award-winning BC Pink Kush, BC Black Cherry and BC Strawnana as well as certain new exotic genetics that will be exported to Portugal
from Canada. Holigen harvested approximately 300 kilograms of medical cannabis in the first quarter of 2022. Initial in-process testing
for both genetics of medical cannabis are indicating high THC content levels of greater than 25%.
The European medical cannabis market has continued to grow as additional
countries have updated their regulations to legalize the use of medical cannabis. Prohibition Partners estimates the medical market generated
approximately US$382 million in 2022 and will reach US$2.5 billion by 20261.
Key Transaction Highlights
and Benefits to Shareholders
1 Source: The European Cannabis Report: 7th Edition.
Tom Flow, Interim CEO of Flowr, has
been in charge of running and managing Holigen since October 2021, and following the successful completion of the acquisition, is
expected to stay on and continue running the operation. An accomplished business leader and recognized cultivation expert, Flow co-founded
Flowr in 2016 and has served in roles including CEO, Chief Operating Officer, and President. Prior to Flowr, he was co-founder and Chief
Operating Officer of MedReleaf Corp, a Canadian Licensed Producer which was sold to Aurora Cannabis for US$2.5 billion (C$3.2 billion).
Flow sits on the board and advisory committees of several cannabis-related companies.
"Holigen is a transformative building
block in our mission to help people lead better lives through improved access to high quality and affordable cannabis products,"
said Tej Virk, Chief Executive Officer of Akanda. "Together with Holigen, we will become the clear leader in current and emerging
markets in Europe for both medical and eventually adult use customers. Portugal is one of the EU's leading jurisdictions to conduct
cannabis business with a forward-looking government, in addition to a responsive regulator. The government has been actively discussing
the advancement of legalization of adult-use cannabis and Akanda is dedicated to our presence in the country as the landscape continues
to evolve. This acquisition materially accelerates our strategy and financials, and positions us to create significant, sustainable value."
are leveraging our recent Initial Public Offering to secure state-of-the-art GMP-certified facilities that have been the recipient of
nearly US$16 million of investment over the past several years. There are also powerful strategic synergies with our first-party/third-party
operating model and assets in Africa and the UK, including the immediate opportunity to supply the growing number of European patients
that are seeking access to these high-quality cultivars."
Added Louisa Mojela,
Executive Chairman of Akanda, "With this acquisition, Akanda will gain the substantial knowledge and skills of the Holigen team,
which has extensive experience in the U.S. west coast and which has overseen the buildout of one of the most advanced indoor grows in
the world in Portugal. The cross-pollination of this expertise will help Akanda deliver on our promise of manufacturing high quality,
scalable and affordable medical cannabis at our Bophelo campus and our footprint for our ESG initiatives. We expect to leverage this
expertise for emerging market opportunities in Lesotho, Africa."
of Akanda and Holigen is an ideal synergistic opportunity for Holigen," added Flow. "With outstanding agricultural resources
in both hemispheres, we can optimize production year-round, which is truly unique. And the exceptional cultivation talent the combined
organization will have will enable us to innovate with unique genetic strains. Finally, this combination creates a more vertically integrated
operation, with significant underused grow, processing, and distribution capacity, allowing us to control the value chain, expand revenue
sources and capture market share."
Under the terms of the
definitive agreement, Akanda will acquire Holigen for a combination of US$3.0 million in cash (C$3.75 million), 1.9 million Akanda common
shares, and the assumption at RPK of approximately US$4.3 million ( 4.0 million) of debt which is non-recourse to Akanda. In addition,
to further align Akanda and Flowr, concurrently with the closing of the acquisition, Akanda will purchase 14,285,714 Flowr common shares
for aggregate gross proceeds to Flowr of approximately US$790,000 (C$1.0 million) at a price per share of C$0.07, subject to the approval
of the TSX Venture Exchange. Akanda has also provided US$678,000 of interim funding to Holigen to fund Holigen's working capital needs
prior to closing of the acquisition.
The acquisition, which
has been approved by the Boards of Directors of both companies, is expected to close during the second quarter of 2022, and is subject
to the satisfaction or waiver of customary closing conditions, including the approval by the TSX Venture Exchange.
Akanda is an international
medical cannabis and wellness platform company seeking to help people lead better lives through improved access to high quality and affordable
products. The Company is building a seed-to-patient supply chain, connecting patients in the UK and Europe with diverse products including
cannabis products cultivated at its competitively advantaged grow operation in the Kingdom of Lesotho and with other trusted third-party
brands. Akanda's initial portfolio includes Bophelo Bioscience & Wellness, a GACP qualified cultivation campus in the
Kingdom of Lesotho in Southern Africa, and CanMart, a UK-based fully licensed pharmaceutical importer and distributor which supplies
pharmacies and clinics within the UK.
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Cautionary Note Regarding Forward-Looking
Information and Statements
This press release contains certain "forward-looking
information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute
"forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation
Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information
or current condition, but instead represent only Akanda's beliefs regarding future events, plans or objectives, many of which, by their
nature, are inherently uncertain and outside of Akanda's control. Generally, such forward-looking information or forward-looking statements
can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect",
"is expected", "budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain
statements that certain actions, events or results "may", "could", "would", "might" or "will
be taken", "will continue", "will occur" or "will be achieved". Forward-looking information may relate
to anticipated events or results including, but not limited to business strategy, product development, manufacturing plans, regulatory
landscape, potential acquisitions and synergies, integration plans and sales and growth plans. The forward-looking information and forward-looking
statements contained in this press release are made as of the date of this press release, and Akanda does not undertake to update any
forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable
Third Party Information
This press release includes market and industry
data that has been obtained from third party sources, including industry publications. The Company believes that the industry data is
accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this
data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable,
but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the
Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the