The reverse takeover of Canada House Wellness Group (CSE: CHV) by a private Montreal-based cannabis producer is expected to close early next year.
In a statement Thursday, Canada House says if closing conditions are met, Montréal Cannabis Médical Inc. will take on its extended sales and processing licensing capabilities, provincial supply deals, a clinic network with 14 Canadian locations and a “profitable” online medical business with a direct-to-patient model focused on military veterans.
“Significant progress” has been made to finalize the deal — first announced in August — and it’s set to close in Q1 2022, Canada House says.
Read more: MTL Cannabis to take control of Canada House
“The finalization of the circular and satisfaction of condition precedents, including confirmatory due diligence, and company audits are nearing completion, alongside internal integration work of Canada House and MTL Cannabis as we approach the closing of the transaction,” the firm says.
Approval is required from two-thirds of Canada House shareholders present at a special meeting scheduled for February.
Canada House’s wholly-owned subsidiaries — licensed producers IsoCanMed Inc. and Abba Medix Corp. — have launched MTL Cannabis dried flower SKUS in four of the nine provinces with distribution relationships.
Included in the launch are MTL Cannabis’s signature Sage n’ Sour cultivar and Cookies n’ Crème. Initial sales have been strong, Canada House says.
Meanwhile, MTL Cannabis has plans to launch SKUs through ICM and Abba between December and June in three of Canada’s largest recreational markets. The markets weren’t specified in the release.
Through the deal, MTL Cannabis will have access to more licensed cultivation space, more than doubling annual production capacity.
Read more: MTL Cannabis is not for sale
The producer will go from its 57,000-square-foot footprint and annual production capacity of 13,000 kilograms of dried flower to 120,000 square feet and 30,000 kilograms of annual production.
After the deal closes, Canada House will operate under MTL Cannabis’s corporate name with its shares trading on the Canadian Securities Exchange under a related ticker symbol.
Canada House stock isn’t currently trading, with a status of “halted pending fundamental change” noted on the Canadian Securities Exchange website.