Canada Coal Inc. said July 27 that it signed an arm's-length non-binding letter of intent for a reverse takeover by Geberi Ltd., or Medcolcanna S.A.S.

In the deal, Canada Coal agreed to pay the cannabis company US$25,000 to secure exclusivity rights to the merger. Medcolcanna will also raise approximately C$3.5 million through a private placement of up to 14 million units, convertible to 25 Canadian cents per common share and 40 Canadian cents per half of a common share purchase warrant.

The proceeds will be used for the construction of greenhouse facilities needed for cannabis production, and for general corporate purposes.

The companies seek to enter into a definitive agreement before Sept. 15.

Medcolcanna, whose subsidiary has operations in Colombia, has received three licenses for the cultivation of psychoactive and non-psychoactive medical cannabis, as well as license for the production, domestic distribution and international export of both THC and cannabidiol medical cannabis.