Abba Medix Signs Agreement with Pharmadrug Production for the Supply of Medical Cannabis to the German Market

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TORONTO, Oct. 31, 2019 /CNW/ - Canada House Wellness Group Inc. (CSE: CHV) ("Canada House" or the "Company"), is pleased to announce its wholly owned subsidiary, Abba Medix Corp. ("Abba"), has entered into a five-year supply agreement (the "Supply Agreement") with Pharmadrug Production GmbH ("Pharmadrug"), a German EU GMP approved generic pharmaceutical manufacturer, and a subsidiary of Pharmadrug Inc. (CSE: BUZZ).

Under the Supply Agreement, Pharmadrug will purchase medical cannabis from Abba's cultivation facility for sale in Germany under Pharmadrug's Cannabion brand. Minimum quantities for the first year are 250 kg of dry flower or oil equivalent, with a right to purchase an additional 250 kg, at a bulk sale price of EUR 4.00 per gram. At today's exchange rates, this equates to minimum approximate revenue of $1.5M CAD during the first year of the Supply Agreement. Minimum quantities for the subsequent years increase to 500 kg of dry flower or oil equivalent, with a right to purchase an additional 500 kg at the same first year price, subject to a price reduction if German wholesale prices fall by more than EUR 1.50 per gram. At the agreed bulk sale price and today's exchange rates this equates to minimum approximate revenue of $3.0M CAD during the subsequent years of the Supply Agreement. Subject to a right of first refusal by Pharmadrug, Abba will have the ability to sell additional dry flower or oil equivalent during the term of the Supply Agreement. The parties are also in discussions with respect to importing high CBD/trace THC strains for other Eurozone countries that are CBD-only jurisdictions.

"This is a significant supply agreement for Abba as it opens the door to the German market," said Michael Orrbrooke, Chief Revenue Officer, Canada House and President, Abba Medix. "Germany is one of the largest and fastest growing medical cannabis markets in the world and represents a huge milestone in our international export strategy."

Pharmadrug is a German pharmaceutical distribution company with over 20 years of operating history and a Schedule I European Union narcotics license allowing for the distribution of medical cannabis to pharmacies in Germany and throughout the Eurozone as markets become legalized. Pharmadrug will sponsor and assist Abba in obtaining its EU GMP certification and in registering Abba's strains with German regulators. Abba has already utilized a third-party EU GMP consultant and Pharmadrug will assist Abba in completing its necessary SOPs. As such, Abba and Pharmadrug anticipate the process can be completed in a relatively timely manner, with shipments beginning as early as March 31, 2020. 

"This supply agreement with Pharmadrug takes us one step closer to bringing our high-quality cannabis to the German market. Having an established route into the European market is of deep value to Abba and Canada House and an important next step in our Path to Profitability." says Canada House CEO Chris Churchill-Smith. "We are working to accelerate our facility's EU GMP certification as we continue to build out meaningful and sustainable distribution channels. We look forward to working with Pharmadrug during the final phases of Abba's EU GMP certification process and bringing our product to the German market in the near term."

About Canada House Wellness Group Inc.
Canada House Wellness Group Inc. is the parent company of Abba Medix Corp., a Licensed Producer in Pickering, Ontario that produces high quality medical grade cannabis; Canada House Clinics Inc., with clinics across the country that work directly with primary care teams to provide specialized cannabinoid therapy services to patients suffering from simple and complex medical conditions; and Knalysis Technologies, a provider of fully customizable, cloud-based software that links physician, provider, and patient to data that supports treatment with medical cannabis.

Canada House Wellness Group's goal is to become the leading cultivator of premium craft cannabis and provider of cannabinoid therapy, targeting the medical cannabis markets globally. Please visit www.canadahouse.ca.

Cautionary Statement Regarding Forward-Looking Information. This press release contains forward-looking statements, including statements that relate to, among other things, the Company's clinic, production and technology businesses, its future plans, the Company's markets, objectives, goals, strategies, intentions, beliefs, expectations and estimates, and can generally be identified by the use of words such as "may", "will", "could", "should", "would", "likely", "possible", "expect", "intend", "estimate", "anticipate", "believe", "plan", "objective" and "continue" (or the negative thereof) and words and expressions of similar import. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Material assumptions used to develop forward-looking information in this news release include, among other things, the regulations related to cannabis use under the Access to Cannabis for Medical Purposes Regulations and the act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts, passed by the Canadian Federal government, making cannabis legal for recreational use by October 17, 2018; Company liquidity and capital resources, including the availability of additional capital resources to fund its activities; level of competition; the ability to adapt products and services to the changing market; the ability to attract and retain key executives; and the ability to execute strategic plans. Additional information about material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the Company's most recent annual and interim Management's Discussion and Analysis under "Risk and Uncertainties" as well as in other public disclosure documents filed with Canadian securities regulatory authorities. The Company does not undertake any obligation to update publicly or to revise any of the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, except as required by law.

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SOURCE Canada House Wellness Group Inc.

Liana Del Medico, Director of Communications & Investor Relations, Canada House Wellness Group Inc., 416-553-3820, [email protected]