Cannasouth signs 3-year agreement with German-based WEECO

Thursday 14th July 2022

Cannasouth’s (NZX: CBD ) wholly-owned subsidiary Cannasouth Bioscience Ltd has today signed a supplier agreement with WEECO Pharma GMBH based in Germany for the supply of cannabis flower from New Zealand into Europe.

Highlights

• WEECO is one of the leading importers of medicinal cannabis in Germany. Under individual cultivar supply agreements to be negotiated, cannabis flower will be supplied to WEECO from Cannasouth’s world-class cannabis cultivation and processing facility based in Waikato, New Zealand.

• Cannasouth’s agreement with WEECO is for a three-year term. Under the agreement WEECO has the right of first refusal for each new cultivar developed by Cannasouth.

• The agreement provides for minimum volumes of cannabis flower to be purchased by WEECO in order for WEECO to retain its first right of refusal for the duration of the agreement. The actual minimum volume of cannabis flower to be purchased is commercially sensitive, and cannot be disclosed at this time.

• Cannasouth and WEECO have also agreed to work together to develop cannabis cultivars to best suit the needs of the European market.

• Cannasouth considers that should the minimum volume of cannabis flower be purchased by WEECO, and all other pre-requisites for the sale and purchase of cannabis flower under the agreement are satisfied, the total value during years two and three of the agreement based on current market pricing could be between NZ$12 million and NZ$15 million dollars, depending on cultivar, pack size and type.

• Cannasouth will retain sufficient flower to supply the local New Zealand market which will enable its medicinal cannabis products to be verified. This flower is expected to be a popular form of medicinal cannabis with New Zealand patients.

Material Terms

• Subject to WEECO continuing to satisfy its minimum volume commitment under the agreement, the term of the agreement is for three years.

• WEECO has the right of first refusal for each new cultivar developed by Cannasouth to be exclusively supplied that cultivar for the European market.

• Each new cultivar supplied by Cannasouth will be covered by its own supply agreement which will cover exclusive supply, region, term, volume, product specifications and (current market) pricing.

• If the parties cannot agree terms on any individual cultivar supply agreement, for any reason, Cannasouth will be free to sell to other parties without restriction.

• Cannasouth is the exclusive New Zealand supplier of flower to WEECO except where Cannasouth is unable to supply flower to meet particular specifications or requirements requested by WEECO.

• The parties agree to establish a genetics development agreement which will ensure future genetics will be best suited to the European market.

Please find attached a profile of WEECO Pharma GmbH and statements from WEECO, and comments from Mark Lucas, Cannasouth's CEO.

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NZX MAP CBD WEECO

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