Canadian companies AgraFlora Organics International Inc. and Blox Labs Inc. plan to form a cannabis-focused joint venture.
The joint venture will include professionals from the cannabis, agriculture and pharmaceutical sectors to manage and operate greenhouse facilities.
Under the letter of intent, AgraFlora will receive up to 19.99% stake in Blox, subject to the satisfaction of certain milestones and closing of an agreement by Blox to acquire a Leamington, Ontario-based cannabis greenhouse facility from Best Cannabis Products Inc.
In October 2018, Blox signed a non-binding letter of intent for a reverse merger with Toronto-based privately held Best Cannabis. Blox said it will acquire all the issued and outstanding securities of Best Cannabis in exchange for about 240 million common shares of Blox.
AgraFlora will be the manager of the Leamington facility and will receive a service fee of 4% of the total cost of annual operations and 71,364,300 special warrants at 4 Canadian cents apiece with a total worth of about C$2.9 million.
The special warrants comprise series A, B and C warrants, with each series containing 23,788,100 specials warrants.
Each special warrant will be convertible into one common share of Blox, subject to the limitation of AgraFlora owning not more than 19.99% stake in Blox and other conditions.