Valens Groworks Corp (OTCMKTS:VLNCF) has signed a non-exclusive 5-year distribution accord with Cannvalate Pty Ltd to enter the rapidly growing cannabis market in Australia. The payment to Cannvalate will be based on the performance milestones, licensing timelines, facility construction, and financial targets.
Builds a manufacturing and extraction facility
Valens is also finalizing a long term deal for an Australia based property with an independent third-party. As per the terms of the accord, the landlord will build a small-sized manufacturing cum extraction facility, which can be expanded at a later date, in Australia. Valens will use this facility as a hub for its operations. The landlord will commence construction on signing the deal and expect to be fully operational in the mid-2021 subject to the receipt of regulatory nods and licensing approvals.
Plans to monetize agreements with Cannvalate
Valens will ship a wide range of products from its Canadian facility to Australia to monetize the agreement with Cannvalate. As per the terms of the deal, Valens requires investing small amounts to fulfill its commitments and realize revenues through the distribution of medical cannabis products in Australia. Valens expects to realize revenues in Q3 2020 subject to the receipt of export and import permits.
Chief Executive Officer of Valens, Tyler Robson, said the accord with Cannvalate provides Valens strategic access to the fast-growing and strong cannabis market in Australia. Valens expects to benefit from Cannvalate’s strong knowledge of the local market and proven track record as a leading Australian distribution platform. The partnership provides a long term growth opportunity for Valens in Australia.
President of the Valens, Jeff Fallows, said the accord with Cannvalate helps the company to improve its incremental revenues with minimal capital expenditure. The medical patient base in Australia expects to offer excellent returns on investments for its shareholders going forward. Valens will also benefit from easing regulations for CBD products next year.
The chief executive officer of Cannvalate, Dr. Sud Agarwal, said the oil-based derivatives accounted for 95% of the sales in Australia. The market for medical cannabis products in Australia is growing at a fast pace. It provides an opportunity for Valens to become a contract manufacturer and extractor in Asia-Pacific and Australia.