TORONTO, Jan. 08, 2018 (GLOBE NEWSWIRE) -- MPX Bioceutical Corporation (the “Company” or “MPX”) (CSE:MPX) (OTC:MPXEF) today announced that the Company, through its indirect wholly-owned subsidiary, S8 Management, LLC (“S8 Management”), is entering into management agreements with each of Rosebud Organics, Inc. (“Rosebud”), which is authorized to purchase, process and sell medical cannabis products in Maryland, and Budding Rose, Inc. (“Budding Rose”), which is authorized to operate a dispensary and sell medical cannabis products in Maryland. Pursuant to the management agreements, S8 Management will provide all management services typically required by a production facility, in the case of Rosebud, and a dispensary facility, in the case of Budding Rose. Management services include, but are not limited to, all staffing, materials, equipment, logistical support, accounting and other administrative functions, contractor selection, advisory services and any other requirements essential to the successful operation of Rosebud and Budding Rose.
In addition to managing the facilities, the Company, through its wholly-owned subsidiary, CGX Life Sciences, Inc. (“CGX”), will concurrently acquire options to purchase 100% of the issued and outstanding common stock of Rosebud for aggregate consideration of US$3,018,181.82 and Budding Rose for aggregate consideration of US$2,481,818.18. The options are each exercisable for a period of two (2) years. The Rosebud exercise price will be comprised of a cash payment of US$2,200,000 with the remainder of the purchase price satisfied by the issuance of 1,329,811 common shares in the capital of the Company (the “MPX Shares”) at a price of $0.77 per MPX Share. The Budding Rose exercise price will be comprised of a cash payment of US$1,800,000 with the remainder of the purchase price satisfied by the issuance of 1,108,184 MPX Shares at a price of $0.77 per MPX Share.
Concurrently with entering into the management agreements and the option agreements to acquire the Rosebud and Budding Rose options, CGX will provide secured loans to the sellers in the aggregate principal amount of US$4,000,000 bearing interest at a rate of 3% per annum. The secured loans are repayable on the earliest of: (a) the termination of the option agreements; (b) the option has not been exercised within 180 days following the expiry of the option periods; and (c) following an event of default.
The management agreements with Budding Rose and Rosebud will result in MPX subsidiaries now operating three medical cannabis enterprises in the State of Maryland. The first management agreement with LMS Wellness, Benefit LLC was announced on December 12, 2017. Rosebud is one of only 14 licenses issued to process cannabis derivatives in the State of Maryland. The facility is completely built-out and when fully operational will be capable of producing 825,000 grams of MPX-branded cannabis concentrates per annum.
Budding Rose will operate a dispensary in a high-traffic area of downtown Bethesda, Maryland, in close proximity to the Walter Reed Military Medical Center and National Institutes of Health. Bethesda, Maryland is located within the Capital Beltway and is one of the wealthiest communities in the Capital Region. The dispensary is currently under construction and is expected to be operational in late February of this year.
“We see our operations in Maryland as offering MPX a ground-floor growth opportunity in a State with a population only slightly smaller than that of Arizona,” says Scott Boyes, Chairman, President and CEO of MPX. “The addition of a licensed processing facility will allow us to introduce the MPX brand of concentrates to a fourth State and to expand the MPX brand into another east-coast market.”
Cannabis Market in Maryland
In 2012, a State law was enacted in Maryland to establish a state-regulated medical marijuana program. Legislation was signed in May 2013 and the program became operational on December 1, 2017.
Originally envisioned to restrict cannabis cultivation and distribution in Maryland to academic medical centers that closely monitored patients, the legislation was revamped to its current form in 2014 under House Bill 881. By September 2016, Maryland state officials were considering more than 800 applications for prospective dispensaries throughout the state. Under Maryland regulations, there is a cap of 102 dispensary licenses (only 10 of which are currently licensed), limited to two per state senatorial district. Further, the Commission has only awarded 14 licenses to grow medical marijuana (out of a pool of almost 150 applicants) and a further 12 licenses to process medical marijuana into pills, oils and other processed products.
With over 8,500 patients currently certified for use of medical marijuana (over 12,000 signed up to become eligible) and over 550 medical practitioners registered to certify patients as eligible, the market in Maryland is expected to be worth US$221 million by 2021 (Source: New Frontier).
About MPX Bioceutical Corporation
MPX, an Ontario corporation, through its wholly owned subsidiaries in the U.S., provides substantial management, staffing, procurement, advisory, financial, real estate rental, logistics and administrative services to two medicinal cannabis enterprises in Arizona operating under the Health for Life (dispensaries) and the award-winning Melting Point Extracts (high-margin concentrates wholesale) brands. The successful Health for Life brand operates in the rapidly growing Phoenix Metropolitan Statistical Area.
The recently acquired GreenMart of Nevada NLV, LLC (“GreenMart”) is an award winning licensed cultivation, production and wholesale business, licensed for both the medical and “adult use” sectors in Las Vegas, Nevada, and is already selling wholesale into the Nevada medical cannabis market. GreenMart has also optioned suitable locations and intends to enter the higher-margin retail arena by applying for at least two dispensary licenses in the Las Vegas market which will operate under the “Health for Life” brand.
The Company owns assets in Massachusetts supporting cultivation, production and up to three dispensaries there, and with the closing of this most recent transaction, MPX manages two full service dispensaries and one producer in Maryland.
MPX continues to expand its U.S. footprint, and is in the process of acquiring management companies that provide operational and other services to two further dispensaries and one production license in Maryland. The Company also leases a property in Owen Sound, Ontario, for which an application to Health Canada has been made for a cannabis production and sales license. In addition, the Company will continue its efforts to develop its legacy nutraceuticals business.
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain “forward-looking statements” under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, MPX’s objectives and intentions. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in MPX’s public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although MPX believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, MPX disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
On behalf of the Board of Directors
MPX Bioceutical Corporation (formerly The Canadian Bioceutical Corporation)
W. Scott Boyes, Chairman, President and CEO
For further information, please contact: