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Cronos inks cannabis concentrate supply agreement with MediPharm Labs

The cannabis companies also agreed to a tolling deal in which Cronos will pay MediPharm to process its cannabis into resin

Cannabis plant and liquid dropper
MediPharm will supply Peace Naturals, a wholly owned Cronos subsidiary, with $30 million worth of cannabis concentrate over 18 months

Cronos Group Inc (TSE:CRON) (NASDAQ:CRON) shares popped Tuesday after the company announced an agreement with cannabis supplier MediPharm Labs Corp (TSE:LABS) (OTCMKTS:MEDIF).

MediPharm will supply Peace Naturals, a wholly owned Cronos subsidiary, with $30 million worth of cannabis concentrate over 18 months with options to increase to as much as $60 million over 24 months.

Cronos stock jumped 7% to C$20.70 in Toronto and nearly 8% to $US15.38, while MediPharm bounced almost 9% to C$7 on the TSXV and about 10% to US$5.22 on the OTC Markets. 

Separately, the companies reached a two-year tolling agreement in which Peace Naturals will supply cannabis in bulk to MediPharm’s extraction facility in Barrie, Ontario and pay the company to process it into resin and other oil derivatives.

READ: Cronos shares sink as it reports wider loss and revenue miss in 1Q

“As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products,” CEO Mike Gorenstein said in a statement. “Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall.”

Cronos, based in Toronto, is a vertically integrated cannabis company which offers production and distribution platforms for medical marijuana, as well as cannabis oil. It has also has operations on five continents. In addition to Peace Naturals, the company operates adult-use brands COVE and Spinach.

MediPharm is a licensed pharmaceutical-grade cannabis oil producer and promoter of white label brands.   

Contact Andrew Kessel at [email protected]

Follow him on Twitter @andrew_kessel

Quick facts: Cronos Group Inc

Price: 6.38 USD

NASDAQ:CRON
Market: NASDAQ
Market Cap: $2.23 billion
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