604.687.2038 info@sowcannabis.ca

NEWS RELEASE

VANCOUVER, British Columbia, April 26, 2019 – Organic Flower Investments Group Inc. (CSE: SOW)(FWB: 2K6)(OTC: QILFF) (“Organic Flower” or “OFIG” or the “Company”) is pleased to announce the Company has entered into a definitive agreement (the “Purchase Agreement”) to acquire an 80 per cent interest in The Edibles and Infusions Corporation (“Edibles and Infusions”); thus conceiving a Joint-Venture (the “JV”) with one of North America’s largest and most storied manufacturer and distributor of chocolate and sugar confectionary products (the “JV Partner”).

Edibles and Infusions will design and develop a 50,000 square foot manufacturing and product formulation facility (the “Facility”), located in Winnipeg, Manitoba. The Facility will be operated by a roster of experienced chocolatiers and confectioners, as well as equipped with industry leading manufacturing equipment capable of producing an assortment of both cannabinoid/terpene-infused products for medicinal, functional and adult-use, including:

  • Gourmet snacks, including caramel popcorn, cheese biscuits, cocoa cookies, glazed pecans, and salty pretzels;
  • Chocolates/toffees/caramels;
  • Gummies/confectionary/gum;
  • Baked goods;
  • Flavoured tinctures;
  • Powdered drinks; and,
  • CBD-infused pet products

Edibles and Infusions is working to finalize its applications for a Health Canada Standard Processing License, as well as a Cannabis Sales License. Organic Flower anticipates the Facility will be fully operational by the first quarter of 2020 and once optimized will be capable of generating in excess of $750 million in annual sales revenue.

Edibles and Infusions is also negotiating various contract manufacturing agreements with Tier 1 Canadian Licensed Producers, in anticipation of the completion of the Facility.

 

Joel Dumaresq, Chief Executive Officer and a Director or Organic Flower stated: “Establishing a controlling stake in this JV is truly transformative transaction for Organic Flower. Along with our highly reputable JV Partner, we have firmly positioned ourselves at the forefront of the next phase of cannabis normalization- ‘Cannabis 2.0’. Armed with this state-of-the-art facility, Organic Flower expects to become the unequivocal leader within the highly lucrative cannabinoid-infused edibles and functional food marketplaces”.

The JV’s downstream capabilities will be buoyed by one of Canada’s leading sales forces, affording Edibles and Infusions the ability to secure immediate shelf space across all major retail channels, including:

  • Groceries;
  • Pharmacies;
  • Convenience stores;
  • Gas stations; and,
  • Quick service restaurants

Organic Flower’s JV Partner was established nearly a century ago and has since become North America’s largest confectionary fruit slice manufacturer; supplying products to over 20,000 locations across North America- most prominently Costco and Wal-Mart. The Company’s JV Partner manufactures and distributes several hundred unique stock keeping units (“SKUs”). The JV Partner’s top revenue generating SKUs, which can be reformulated to permit low-touch infusion of cannabinoids include:

  1. Assorted large fruit slices (Premium private label);
  2. Assorted mini fruit slices (Premium private label);
  3. Sunsations (Private label Pectin based round jellies);
  4. Satin mix;
  5. Mint baby pillows;
  6. Assorted baby pillows;
  7. Fruit drops;
  8. Toasted coconut marshmallow;
  9. Christmas ribbon; and,
  10. Neapolitan Squares

The development of the JV’s state-of-the-art manufacturing facility further will position Organic Flower as the premier domestic vertically integrated cannabis company. This transaction affords the Company preeminent exposure to complementary product development and downstream assets within the burgeoning cannabinoid-infused and functional foods vertical. 

The marketing and eventual distribution of the JV’s cannabinoid-infused product lines will follow additional testing and will be subject to necessary approvals and licences to be granted by Health Canada, as well as regulatory authorities in other territories.

Organic Flower’s JV Partner boasts established industry relationships, as well as access to best-in-breed supply chain management infrastructure. The Company’s JV Partner will leverage its extensive operating experience to:

  • Expedite product to market;
  • Design cutting-edge packaging protocols;
  • Source superior raw product inputs; and,
  • Develop premium product formulations

Laurel Fletcher, President of Organic Flower’s JV Partner stated: “We are ecstatic to welcome Organic Flower into our family. With three generations of confectionery manufacturing experience, we understand the importance of quality. We are confident that together with Organic Flower, we are tactically positioned to capture a large portion of the CBD/THC market”.

Under the terms of the Purchase Agreement, Organic Flower will acquire an 80% interest in the Edibles and Infusions JV for an aggregate purchase price equal to up to $42.5 million, payable in common shares in the capital of the Company (“Aggregate Purchase Price”). Of the Aggregate Purchase Price, Organic Flower will pay $10 million at closing, comprised of common shares of Organic Flower (each an “Organic Share”) at an attributed value of $0.50 per Organic Share. Organic will issue up to an additional $32.5 million Organic Shares at an attributed price equal to a 5-day VWAP at the time of issuance, upon the JV achieving certain milestones throughout 2022. Pursuant to the JV, Organic will fund up to $15 million to develop the Facility and issue up to $9 million of Organic Shares to the manager of the JV based on the manager’s achievement of certain milestones throughout the term of the JV.

In addition to acquiring an 80% interest in the Edibles and Infusions JV, Organic Flower has also acquired an option (“Option”) to purchase certain business assets of the JV Partner for the purchase price of $12.5 million. As consideration for the grant of the Purchase Option in favour of Organic Flower, the Company has agreed to issue: (i) $1 million of Organic Shares for the Option to be exercisable within six (6) months of the Option grant; and(ii) an additional $1 million Organic Shares to extend the exercise period of the Option for an additional six (6) months. The value of the Organic Shares issued for the Option is based on a 5-day VWAP at the time of issuance.

The Organic Shares issuable on the acquisition of the JV interest and the Option are subject to a hold period of at least four (4) months and one (1) day. The closing of this acquisition is subject to customary terms and conditions. 

ABOUT ORGANIC FLOWER INVESTMENTS

Leveraging strategic relationships, proprietary investments and exclusive partnerships with preeminent international cannabis cultivators and formulators for the development of best in class products and brands to be marketed and distributed throughout our global footprint.

Via its wholly owned subsidiary, Delta Organic Cannabis (“DOC”), Organic Flower is launching one of the largest and most efficient cannabis facilities on the planet. Organic Flower has control or direction over 44,852,040 common shares of AgraFlora Organics International Inc. (“Agra”), representing 10.12 per cent of the issued and outstanding share capital of Agra on a non-diluted basis.

ON BEHALF OF THE ORGANIC FLOWER INVESTMENTS GROUP INC. BOARD OF DIRECTORS

“Joel Dumaresq”

Joel Dumaresq

CEO, Director

+1 (604) 687-2038

info@sowcannabis.ca

 

Learn more about Organic Flower by visiting our website at: https://sowcannabis.ca/

THE CSE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ACCURACY OR ADEQUACY OF THIS RELEASE.

Notice Regarding Forward Looking Information:

This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities law. Forward-looking information is frequently characterized by words such as “plan”, “continue”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “potential”, “proposed” and other similar words, or information that certain events or conditions “may” or “will” occur. This information is only a prediction. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking information throughout this news release. Forward-looking information includes, but is not limited to: political changes in Canada and internationally, future legislative and regulatory developments involving cannabis in Canada and internationally, the Company’s ability to secure distribution channels in international jurisdictions, competition and other risks affecting the Company in particular and the cannabis industry generally.

The forward-looking information contained in this release is expressly qualified by the foregoing cautionary statements and is made as of the date of this release. Except as may be required by applicable securities laws, the Company does not undertake any obligation to publicly update or revise any forward- looking information to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.