Licensing Agreements

CannAmerica Brands Corp Enters Licensing Agreements

CannAmerica has an exciting start to fiscal 2019. The Company has entered into licensing agreements for its key brands, AmeriCanna and CannAmerica in three key geographic markets – Colorado, Nevada and Maryland with industry leaders in each of these respective markets. The Company has licensed its brands, packaging, formulas, supply chain and processes to the three licensees in exchange for licensing fees, which equate to approximately 25% of AmeriCanna and CannAmerica brand related gross revenue. The Company has successfully raised $5.4MM via non-brokered private placements and is well-positioned to grow its business further and pursue a public listing on the Canadian Securities Exchange (the “CSE”) this autumn.

Update on Current Licensees

The Company currently licenses its CannAmerica and AmeriCanna brands to licensed and regulated Cannabis product manufacturers and wholesale licensees. As of June 30, 2018, the Company had three licensing agreements with licensees in the States of Colorado, Nevada and Maryland.

Colorado

The licensee in Colorado is a well-established 25,000 square-feet manufacturing facility which is currently selling 6 SKU’s in over 350 dispensaries in Colorado. New SKU’s will be introduced into the Medical market in October. The production commenced in June 2018, with over 575,000 gummies produced to date for total licensee gross revenue of $448,500.

Nevada

The licensee in Nevada is a well-established 30,000 square foot cultivation and manufacturing facility that sells through 63 dispensaries in the state. The production commenced in August 2018 for 8 SKU’s with over 150,000 gummies produced to date. The distribution will begin prior to the Labor Day Holiday.

Maryland

The licensee in Maryland has a 7,500 square-feet facility and was one of the first extraction licenses issued in Maryland. The licensee currently holds one of the 15 licenses in Maryland. Operations relating to CannAmerica’s license agreement commenced in August 2018. The licensee is currently processing materials and building inventory for sales to begin before the Labor Day Holiday.

Updates on Near-Term Growth

New Geographic Markets

The Company plans to launch its existing brand portfolio via new license agreements in several important and new US states, including California, in the next six months.

Acquisition Pipeline

The Company is currently assessing a number of key brands as acquisition targets to continue growing the portfolio of brands and to diversify revenue streams. These efforts will serve as a catalyst for significant growth both in revenue and profitability, and will be the core steps in the Company’s growth strategy.

Update on Public Listing Process

The Company submitted its non-offering prospectus to the BC Securities Commission (the “Commission”) for reviewing on May 31st, 2018 and since then has engaged in written dialogue with the Commission via two written response letters and management Q&A calls. The Company expects to list on the CSE in October 2018 after final approval from the Commission and the CSE.

Business Model

The Company currently owns a portfolio of brands in the Cannabis space in the states of Colorado, Nevada and Maryland. It currently focuses on its CannAmerica and AmeriCanna brands. It aims to maximize the value of its brands by promoting, marketing and licensing the brands through various distribution channels, including dispensaries, wholesalers and distributors in the US. The core strategy is to enhance and monetize the global reach of its existing brands, and to pursue additional strategic acquisitions to grow the scope of and diversify the portfolio of brands.

Strategy

The Company aims to acquire well-known consumer brands in the Cannabis space with high potential for growth and strong brand awareness. The Company is also seeking to diversify its portfolio by evaluating the strength of targeted brands and expected viability and sustainability of future royalty streams. Upon the acquisition of a brand, it seeks to partner with leading wholesalers and dispensaries to drive incremental value and maximize its brand equity. It focuses on certain key initiatives in its licensing and brand management business. These initiatives include:

  • Maximizing the value of its existing brands by creating efficiencies, adding additional product categories, expanding distribution and retail presence and optimizing sales through innovative marketing that increases consumer brand awareness and loyalty;
  • Expanding through e-commerce channels;
  • Developing international expansion through licenses, partnerships and other arrangements with leading retailers and wholesalers outside the United States; and
  • Acquiring consumer brands (or the rights to such brands) with high consumer awareness, broad appeal and applicability to a wide range of product categories.

The Company’s business is designed to continually build upon and add to the value of its brands through license agreements and partners that are responsible for manufacturing and distributing its licensed products. Its brands are licensed for the Cannabis space and it seeks to select licensees who have demonstrated the ability to cultivate, manufacture, produce and sell quality products in their respective licensed categories.