The five-year, non-exclusive agreement will allow Valens GroWorks to become a preferred supplier to Cannvalate
Valens GroWorks, a developer of cannabinoid-based products, has signed a distribution agreement with Cannvalate, an Australian medicinal cannabis distributor and clinical research organisation.
The five-year, non-exclusive agreement is based on asset-light revenue-generating pay for performance model and includes milestones based on certain financial targets and facility construction and licensing timelines outlined in it.
Under the terms of the agreement, Valens is also in the process of finalising a long-term lease on a property in Australia with a third party.
The site is expected to be the hub of Valens’ operations in the county and will be built by the landlord as a small-sized extraction and manufacturing facility, designed to be scalable.
Once the lease agreement is signed, the facility’s construction will begin and it could be operational by the middle of next year, subject to applicable licensing and regulatory approvals.
The Valens Company CEO Tyler Robson said: “This partnership provides Valens with strategic access to Australia’s strong and fast-growing cannabis market.
“With a proven track record, strong knowledge of the local market, and a leading distribution platform in Australia, Cannvalate is an excellent partner for us to build our presence in this pivotal hub with significant long term growth opportunity.”
Valens expects the Australian prescription cannabis market could reach $1bn by 2023
Valens is also expected to monetise the agreement with Cannvalate through shipments of a broad range of products from its facility in Canada to Australia, in the near term.
As per the terms of the agreement, Valens will need to invest a minimal upfront capital and the company is targeting initial revenue from the agreement in the third quarter of this year, subject o receiving necessary and import and export permits.
The Valens Company president Jeff Fallows said: “The agreement allows us to maximise incremental revenue potential while spending minimal capital upfront and scaling our operations as the opportunity expands.
“Australia’s medical patient base, similar to the early stages of medical patient growth in Canada, offers an attractive return for our shareholders with potential upside as this also positions us strongly in a market that is expected to ease regulations around CBD products in early 2021.”