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Naturally Splendid to capitalize on US demand for cannabinoid-based products via new licensing deal

Published: 00:24 08 Oct 2014 AEDT

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Naturally Splendid Enterprises (CVE:NSP)(OTCQB:NSPDF) says its US subsidiary has signed a letter of intent to license Dublin-based Full Spectrum Laboratories' cannabinoid extraction and formulation technologies, following up on advanced negotations this past summer.

The license will give the Vancouver-based superfoods company worldwide rights to a suite of advanced cannabinoid technologies, including the first issued US patent for water-soluble cannabinoids --- a major part of its plan to develop and sell cannabinoid-based nutraceutical and pharmaceutical products and therapies.

The deal is over two years in the making, with Naturally Splendid having spent this time working with Full Spectrum and the Irish entity's sister company, Boreal Technologies, with which it already has a license agreement in North America.

The existing agreement with Boreal Technologies is for Naturally Splendid to market Boreal's full range of plant-based omega 3 nutraceutical products throughout North America, which is based on a similar water-soluble idea. The line is based on Boreal's method to convert plant-based omega oils into powder and aqueous forms without actually changing the composition of the oil, leaving all the benefits of omegas intact.

Full Spectrum has spent more than five years and invested well over $10 million to develop its technologies covered under the new license deal, with the current American market for cannabinoid-based products estimated to exceed $300 million this year and expected to grow by 50 percent each year for the forseeable future.

The new license deal with Full Spectrum, for an initial term of 10 years, will give Naturally Splendid's US subsidiary immediate access to commercial-ready cannabinoid-based products already developed for a wide range of neutraceutical product categories in the US, the company said.

The agreement is to market these products in countries worldwide that allow for the manufacturing of cannibinoid-based items. There are more than 80 cannabinoids in industrial hemp and marijuana, with many associated with health benefits. Two of the most prominent are THC and CBD, the latter of which is also known as cannabidiol. 

The reduced psychoactivity of CBD-rich cannabis makes it an appealing nutraceutical product for individuals seeking anti-inflammatory or anti-epileptic effects without lethargy or dysphoria.

"The company continues to maximize revenue opportunities relating to cannabis sativa, which includes industrial hemp and marijuana," said CEO Craig Goodwin.

Indeed, Naturally Splendid has already established its own hemp-based Natera superfood product line that is being marketed across Canada and the US, while also pushing out the first of Boreal's plant-based omega products, called HempOmega. The product is expected to sell as an additive to supplement a wide variety of existing food and beverage products, as well as a stand-alone omega 3 product.

"Now, through this worldwide licensing agreement with FSL we have positioned the company's wholly-owned American subsidiary to capitalize on the exploding demand for cannabinoid-based products and solutions," added the chief executive.

Today's agreement also gives Naturally Splendid the rights to sub-license the cannabinoid technologies to third-parties. A definitive deal is anticipated to close before the end of October, subject to regulatory approval and due diligence.               

The license deal also has potential outside the US, as the company said cannabinoid-based products may be legally available to qualified Canadian patients as soon as next year following recent court rulings in BC. According to Naturally Splendid's statement, it expects the Canadian market for cannabinoid products to exceed $500 million a year by 2019.

Initially, the company's US subsidiary will focus on the American market where hemp-extracted cannabinoid products are allowed, and in the 23 states that allow for marijuana-extracted cannabinoid products.

A certain portion of Full Spectrum's license fees under the deal will be provided via common shares of Naturally Splendid. Shares of the company closed at 26.5 cents on Monday, up more than 32 percent since the beginning of January.

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