Biome Grow Inc (CSE:BIO) told investors Friday it had struck the largest cannabis supply agreement to date in Atlantic Canada.
Subsidiary Back Home Medical Cannabis Corp has agreed on a 24,000-kilogram three-year production and supply agreement with the Province of Newfoundland and Labrador, it said, marking one of the top five largest deals of its kind in the Canadian cannabis market by quantity.
Significantly, Biome expects that the supply deal will represent close to $100 million in revenue a year from the beginning of 2020.
Research and development
The company will also invest $500,000 over five years for research and development in the Province.
"Today's announcement is part of Biome's strategic plan to invest in sustainable production facilities and ecosystems across Atlantic Canada," said Khurram Malik, CEO of Biome.
"The region provides Biome with the benefit of having a local customer base and governments that value the company's invest local, hire local, and brand local' approach to building sustainable cannabis ecosystems.
"Furthermore, this supply agreement allows Back Home to make the investment to create a large employment base that will create high-quality products for both the local market and for customers in international jurisdictions that are looking for a Made in Canada' offering."
Back Home's new $60 million production facility will operate from Barachois Brook on the west coast of Newfoundland.
It will be built in multiple phases with an initial 18,000 square feet (sq ft) expanded to a further 150,000 sq ft in 2019.
The expansion will bring the company's total footprint to 168,000 sq ft, making it the largest cannabis production facility in Newfoundland and Labrador.
Biome will receive access to five retail licenses and the deal means the creation of a minimum of 120 jobs at Back Home's production facility, with around an additional 80 jobs for Back
Home's five retail stores and associated infrastructure in Newfoundland and Labrador.
Back Home expects to produce Newfoundland and Labrador-grown cannabis in 2019 and plans to operate its production facility in the province for at least 20 years.
Committed to supply
Biome has committed to supplying up to 4,000 kgs in the first year of its three-year contract, with 10,000 kgs annually in the following two years from across its portfolio of production assets.
Rapidly growing pot firm Biome has acquired five subsidiaries and has so far announced around 390,000 sq ft of production capacity in operation or under development in Ontario and Atlantic Canada.
Shares in Toronto stand at $1.05 each.
Reporting by Giles Gwinnett