Cann Group has agreed to sell its Southern cultivation and manufacturing facility to Sativite in a deal worth almost A$5.5m.
The firm put the facility on the market in October 2022 as part of a plan to consolidate the majority of its operations in Mildura.
The parties have come to terms on the sale of the Southern facility’s land and business assets, the licensing of certain Cann genetics, and the provision of services from Cann to Sativite to facilitate the transfer of commercial operations.
To maintain operational continuity, the transaction will take place in two stages.
Sativite will first acquire the land and building for $3.1m and provide Cann with a lease to continue operating at the site on its behalf. Sativite has already paid a 10% non-refundable deposit under the sale contract.
The lease, which will involve a nominal rental, will commence on or around the settlement of the land contract, expected on February 28.
In the second phase, Sativite has agreed to acquire Cann’s business assets at the facility for $1.9m via a binding Memorandum of Understanding (MOU).
Settlement will take place once Sativite receives its licence from the Office of Drug Control (ODC) to operate at the facility, which is expected in the second half of 2023. It will take over the employment of Cann staff operating the assets at that time.
Under the MOU, the parties have also agreed for Cann to contract manufacture at the facility on Sativite’s behalf. Sativite will pay service fees to cover operating costs for the cultivation and production of bulk flower and the firms expect to come to a separate agreement covering GMP manufacturing of patient-ready flower products.
The arrangement will remain in place while Sativite secures ODC approval, after which it will take on operational responsibility for the site. Sativite currently operates another ODC-licensed medicinal cannabis cultivation facility which the parties said should assist it in obtaining the necessary approvals.
The firms have also agreed for Cann to provide access rights to certain genetic strains, for a total fee of $480,000 payable over two years from the land settlement date.
Cann Group CEO Peter Crock said: “We are very pleased that the Southern facility will remain in the medicinal cannabis ecosystem and that the agreement with Sativite will allow commercial operations at Southern to smoothly transition across without negatively impacting the supply of medicines to patients.
“We are working collaboratively with the Office of Drug Control to ensure this transaction proceeds in accordance with all regulatory requirements, as quickly as possible.”
Sativite managing director and CEO Mike Cleary added: “Sativite is excited by the opportunity to work with Peter and the team at Cann to continue innovation in the sustainable production of medicines.
“The acquisition of an established production and manufacturing facility continues the journey for Sativite to ensure patients have access to good quality Australian-grown medicines”.
