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Supreme Cannabis Provides Investor Update Relating to the Legalization of Cannabis in Canada

June 26, 2018
  • Supreme Cannabis to focus on the recreational market with its leading high-quality cannabis through its 7ACRES brand.
  • Investment in world-class cultivation infrastructure, proprietary genetics and management systems, top tier corporate culture and high-quality cannabis flower is expected to lead to the innovation of high-quality products.
  • Supreme Cannabis hires Steve Chan as VP of Investor Relations & Corporate Communications.

TORONTO, June 26, 2018 /CNW/ - The Supreme Cannabis Company, Inc. ("Supreme Cannabis" or the "Company") (TSXV: FIRE), applauds the Canadian federal government for the passage of the Cannabis Act (the "Act") making Canada the first G7 country to legalize cannabis for adult  recreational use.  The Act received Royal Assent on June 21, 2018 and is expected to create a multi-billion-dollar legal consumer market with sales slated to commence as of October 17, 2018.

"The passage of the Cannabis Act is a victorious moment for cannabis policy in Canada, which occurred after decades of work and activism by multiple generations of cannabis advocates. I look forward to the commencement of our national recreational market, which will serve as a complement to and expansion of Canada's current, world-leading medical cannabis regulations," said John Fowler, CEO of Supreme Cannabis.  

7ACRES National Recreational Brand

Upon legalization of recreational cannabis, Supreme Cannabis' wholly-owned subsidiary 7ACRES' will focus on the recreational market.  To date, 7ACRES has been successful in selling to Licensed Producers under a business to business model and will now shift to selling directly to provincial distributors and retailers. 7ACRES has applied for retail listings in provinces across the country. The Company believes that 7ACRES is now one of the few nationally-renowned premium cannabis brands in Canada, as evidenced by its premium pricing model including its take-or-pay agreements priced at $6,000 per kilogram. Management believes 7ACRES is positioned to leverage its success in the medical market to now launch 7ACRES as a national high-quality consumer cannabis brand. Supreme Cannabis believes its focus on high-quality cannabis will allow the 7ACRES brand to continue receiving its premium pricing and generate favourable returns for the Company and its shareholders.

"7ACRES is positioned as a brand that consumers will recognize on provincial shelves nationally. 7ACRES is committed to cultivate quality cannabis flower at scale and maintain a culture equally committed to this brand promise," said Mr. Fowler. "In contrast to many of our peers, ahead of legalization we chose to take a deliberate approach to focus on the consumer and quality product versus a race-to-bottom approach focusing on cost-competition," said Mr. Fowler. "Our market research suggests that, based on the US experience with legalization to-date, cannabis flower will be the leading product category in the recreational market. I believe our high-quality cannabis flower is attractive for Canadian cannabis flower consumers, particularly those who consume daily and weekly, which is a segment of the market that we anticipate will drive the bulk of the national dollar volume for flower sales. In addition, high-quality flower is the basis of and a necessary input to produce high-margin concentrate products which we anticipate being legal for production and sale in the coming years, subject to regulatory approval."

Mr. Fowler continued, "To achieve our quality we have focused on quietly building our team, corporate culture, our world-class facility in Kincardine, and our management systems in order to grow product with premium aroma, visual appeal and flavour of our flower as we scale. In our view, in order for legal cannabis to replace the illicit market, the market must produce high-quality products to meet the demands of quality-focused consumers."

7ACRES' World Class Production Facility

Since 2013, 7ACRES has been developing proprietary growing methodology for producing high-quality cannabis flower for consumers focused on aroma and flavour.  The 7ACRES growing facility is designed to operate as an indoor facility where plant growth is driven by double-ended HPS lighting and environmental parameters controlled by automated HVAC. Supreme Cannabis believes the 7ACRES facility produces a unique flower that bares many of the favourable characteristics of indoor-produced cannabis flower, with additional complexity in aroma and flavour produced by supplemental levels of natural sunlight.

7ACRES currently has three modular flowering rooms in operation with an anticipated annualized output of 5,000 kg. 7ACRES recently completed construction of three additional equally-sized flowering rooms which, subject to licensing, is anticipated to double 7ACRES annual output. Management anticipates construction of all 23 modular flowering rooms to be completed by December 2018. Once fully operational, management anticipates annual output of at least 50,000 kg per annum of high-quality cannabis flower.

"Supreme Cannabis has been focused on scaling production of high-quality flower since becoming licensed in March 2016.  In our view, the modular strategy driving our 7ACRES expansion de-risks the scaling of our operations while maintaining our reputation for high-end quality and supports our quality-based brand promise. As one of the newest publicly-listed Licensed Producers, we are one of the fastest scaling and have generated approximately $5.3 million of revenue in the first 9 months of revenue," said Mr. Fowler.

Culture of Quality, Success and Empowerment

Management takes pride in the development of quality-driven corporate culture at 7ACRES. Supreme Cannabis believes culture is a direct contributor to the quality of 7ACRES' cannabis flower and quality product innovation starts with quality flower and people.  Investors and other stakeholders such as existing customers, retailers and provincial buyers who have toured the Company's 7ACRES facilities in Kincardine have been struck by the quality, motivation and enthusiasm of the 7ACRES team.  Supreme Cannabis fosters this culture based on a clear mission for 7ACRES to be the leading brand for high-end cannabis flower, which has allowed the Company to attract and retain top operational talent and also focus on the development and innovation of high-end concentrate products.  Further, management believes corporate culture will be an important element to establishing 7ACRES as an authentic consumer brand with a mission to produce beautiful cannabis products for cannabis enthusiasts whose purchasing will be driven by quality.

In addition, Supreme Cannabis has been actively building its management team to support its consumer and medical business development. Supreme Cannabis has retained top talent from the alcohol, agriculture and pharmaceutical Industries. 

VP of Investor Relations and Corporate Communications

Supreme Cannabis is also pleased to announce the addition of Mr. Steve Chan, as Vice President, Investor Relations & Corporate Communications.  Mr. Chan was most recently a Principal of Hugessen Consulting in Toronto, Ontario. For over a decade, Mr. Chan has served as a trusted advisor to boards and senior management teams across North America, advising on complex strategic performance, governance, and shareholder interests. Mr. Chan has worked closely with global institutional investors, pension and sovereign wealth funds, private equity, and major family offices. He has worked with major public and private, including companies in high growth sectors and regulated industries. Previously, Mr. Chan was a capital markets strategist at TD Securities

The Company granted 400,000 stock options (each an "Option") to Mr. Chan pursuant to the Company's Amended and Restated Incentive Stock Option Plan (the "Plan"). Each Option has an exercise price of $1.70 and is exercisable into one common share, subject to certain vesting conditions and the terms and conditions of the Plan, and expire on June 25, 2023.

About Supreme Cannabis

Supreme Cannabis is a Canadian publicly traded company committed to becoming a leading cultivator and distributor of sun grown cannabis through its wholly-owned subsidiary 7ACRES. 7ACRES is a federally licensed producer of cannabis pursuant to the ACMPR operating inside a 342,000 sq. ft. Hybrid Facility. The Hybrid Facility combines the best technology of indoor production with the efficiencies and sustainability of a greenhouse, in a single large-format production footprint. Please visit www.supreme.ca and www.7ACRES.com for more information.

Forward-Looking Information

Certain statements made in this press release may constitute forward-looking information under applicable securities laws. These statements may relate to anticipated events or results and include, but are not limited to, expectations regarding the recreational cannabis market In Canada, our future retail distribution partners, the cost versus quality pricing dynamics in the legal market, the quality of our product at scale, the legalization of adjacent cannabis products in Canada, the expected production at the 7ACRES facility and other statements that are not historical facts. Particularly, information regarding our expectations of future results, targets, performance achievements, prospects or opportunities is forward-looking information. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as "may" "will", "expect", "believe", "estimate", "plan", "could", "should", "would", "outlook", "forecast", "anticipate", "foresee", "continue" or the negative of these terms or variations of them or similar terminology. Forward-looking statements are current as of the date they are made and are based on applicable estimates and assumptions made by us at the relevant time in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances. However, we do not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. There can be no assurance that such estimates and assumptions will prove to be correct.  Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors discussed in the "Risk Factors" section of the Company's Annual Information Form dated January 22, 2018 ("AIF"). A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com. The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE The Supreme Cannabis Company, Inc.

Investor Relations, Scott Davidson, Bayfield Strategy, Inc., Phone: 416-466-6265, Email: IR@supreme.ca, Website: supreme.ca
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