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Chemistree to Acquire Washington State Cannabis Assets
Wednesday 13 June 2018

13 June 2018 - Canada-based Chemistree Technology Inc. (Canadian Securities Exchange: CHM) (US OTCQB: CHMJF) has entered into a definitive asset purchase agreement through a wholly-owned subsidiary, to acquire a suite of Washington-based assets used in cannabis cultivation, production, distribution and branding, the company said.

Terms of the transaction were not disclosed.

The acquisition is subject to all required shareholder and regulatory approvals, including approval of the Canadian Securities Exchange.

On May 11, 2018, the company announced that it had entered into a letter of intent with arm's-length parties to acquire, through its wholly-owned subsidiary, Chemistree Washington Ltd., a suite of Washington-based assets used in cannabis cultivation, production, distribution and branding. Chemistree then proceeded to conduct further due diligence and negotiate a definitive asset purchase agreement for the Washington acquisition.

On May 31, 2018, Chemistree Washington entered into a definitive asset purchase agreement with Elite Holdings Inc. with respect to the Washington acquisition.

Pursuant to the Washington acquisition Agreement, Chemistree Washington will acquire certain assets, including, but not limited to, all inventory, leases, software, furniture, systems, equipment, and lighting from the Washington Vendor.

The acquisition does not include any receivables, payables, warranties, employee or tax liabilities of the Washington Vendor.

Consideration for the Washington Assets will be USD 1m payable in cash. USD 800,000 will be payable upon closing of the Washington acquisition, and four instalments of USD 50,000 each will be payable at the end of each of the four calendar months following closing, commencing on the last day of the first full month after closing.

Following closing of the Washington acquisition and receipt of approval from the Washington State Liquor and Cannabis Board, Chemistree Washington expects to enter into agreements with a strategic partner, which is an arm's length party to and unaffiliated with Chemistree, whereby the Strategic Partner subleases and licenses the Washington Assets from Chemistree Washington, in order for the strategic partner to operate the Sugarleaf brand of retail cannabis products in Washington state.

Management anticipates that, in the coming months, the strategic partner may expand operations to include a cannabis laboratory and testing facility, as well as potentially a processing facility to provide for a larger suite of products to be produced.

The company, through Chemistree Washington Ltd., also expects that it will invest in and develop real estate in the State of Washington for the purpose of serving licensed I-502 production and processing businesses.

In addition to providing specialised facilities to I-502 producers and processors, the company intends to develop its growing techniques, standard operating procedures and innovative manufacturing practices to further assist license holders with their production and processing operations.

The company expects that the asset acquisition will be treated as a fundamental change under policy 8 of the CSE. The company will be filing the appropriate documentation with the CSE to seek approval of the acquisition and the change in classification of the company from a technology issuer to an investment issuer.
Details
Date Published: 13/06/2018
Target: Washington state assets used in cannabis cultivation, production, distribution and branding
Country: USA
Sector: Agriculture/Forestry
Type: Corporate acquisition
Financing:
Status: Agreed
Vendor:
Buyer: Chemistree Technology
Comment:
Terms of the deal were not disclosed

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