AgraFlora Organics International, Inc. (CSE: AGRA and OTCPK: AGFAF) announced Thursday it entered into a interim agreement to acquire Sanna Health Corp., in an all-stock transaction valued at $23 million.
AgraFlora will acquire Sanna, a Toronto-based licensed producer, at $0.30 per share for a total of $23 million to effectively double its 2020 production capacity.
Sanna’s 88-acre outdoor cultivation site, of which 13 acres will be ready for the 2020 growing season, is predicted to produce 1,000 kilograms of cannabis flower per acre at a cost of $0.10 per gram.
That’s on par with Aleafia Health’s (TSX: ALEF and OTC: ALEAF) record-setting cost of $0.10 per gram for its inaugural outdoor harvest.
Read more: Aleafia Health makes $7.1 million selling Canada’s cheapest weed
After two planned expansions build out Sanna’s 13 acres to the full 88, AgraFlora says it will be able to produce 75,000 acres of dried cannabis per harvest.
“Sanna’s outdoor cultivation project will be of significant strategic value to us, providing access to high-quality, sun-grown cannabis flower for environmentally conscious consumers,” AgraFlora CEO Brandon Boddy said in a press release. “As well as material amounts of low-cost organic biomass to fuel our internal extraction and edible manufacturing initiatives.”
The grow site is located 90 minutes outside of the GTA, which will grant AgraFlora access to one of Canada’s largest cannabis consumer bases, according to the company.
Flagship facility hopes to add dispensary
Sanna’s flagship facility is even closer, just 30 minutes from downtown Toronto, and features 27,000 square feet of licensed cultivation and processing space, with the option to expand to 89,000 square feet.
Following Ontario’s anticipated regulatory changes, the company also hopes to build an on-site 1,500 square foot dispensary at the flagship facility.
Read more: Ontario’s cannabis retail market shows signs of warming
Sanna’s licences for cultivation, processing and medical cannabis will also allow AgraFlora to extract up to 1,000 kilograms of hemp biomass per month using on-site ethanol extraction, according to the release. That makes the company primed to make near-term sustainable cash, the release added.
Once everything is up and running, the facility will have an extraction capacity of 250,000 kilograms of dried hemp and cannabis biomass, much of which the company says it hopes will come from the nearby 88-acre cultivation site.
