Emerging leader in infused cannabis beverages, BevCanna Enterprises Inc. (CSE:BEV, Q:BVNNF, FSE:7BC) (“BevCanna” or the “Company”) announced today a licensing arrangement between BevCanna and Keef Brands (“Keef”).
Under the license agreement (the “Agreement”) dated April 30, 2020, BevCanna will act as the exclusive licensee and co-packer for the award-winning Keef lines of beverages in Canada. BevCanna will leverage its extensive experience in developing and launching beverages in the Canadian market to maintain responsibility and compliance with Health Canada, as well as all related national sales and distribution efforts.
In addition to BevCanna’s role as licensee for Keef in Canada, BevCanna has engaged Keef, via its network of licensed manufacturing partners, to co-pack and distribute BevCanna’s cannabis-infused beverage products in the United States. BevCanna will leverage the extensive Keef manufacturing and distribution network, which includes thousands of licensed dispensaries and delivery services across Colorado, California, Arizona, Nevada, Michigan, Oklahoma, and Puerto Rico. An April 2020 Headset Insights report also found that Keef Brands offers six of the top ten-selling cannabis beverages in Colorado, as well as three of the top ten-selling in California. The Agreement as it relates to Canada, the United States, and other markets is described in further detail below.
“This partnership with Keef Brands is a fantastic opportunity for BevCanna,” said John Campbell, Chief Strategy Officer at BevCanna. “Keef’s robust U.S. co-pack and distribution network will be a significant asset to BevCanna’s expansion plans in the U.S., and BevCanna’s expertise in the Canadian infused beverage market will build Keef’s Canadian presence. It’s a strong combination, with excellent potential for both companies.”
“BevCanna is an ideal partner for Keef to move forward with in both North American and global markets,” said Erik Knutson, Co-Founder and CEO at Keef Brands. “The team’s expertise in developing and launching appealing, innovative infused beverages is exactly what we’ve been seeking, and their experience in working within the Health Canada regulatory environment will be invaluable to Keef.”
Canada
Under the Agreement, BevCanna has agreed to exclusively purchase from Keef certain packaging, ingredients and other non-cannabis or THC based components necessary to manufacture the products licensed by Keef to BevCanna under the Agreement. The maintenance of exclusivity is subject to mutually agreed upon forecast milestones in respect of target amounts of goods to be purchased by BevCanna in each calendar year being met.
The Agreement is for an initial term of three years with a subsequent three-year renewal, at BevCanna’s option. If BevCanna has not been granted requisite licenses by Health Canada with respect to cannabis on or before December 31, 2020, Keef may terminate the Agreement. The parties agreed that this date may be extended by mutual written agreement.
United States
Under the Agreement, Keef has agreed to assist BevCanna in launching its U.S. infused beverage launch program by providing BevCanna with full access to its co-packer and distribution network. The co-packing and distribution arrangements will be additive, meaning that BevCanna will piggyback on Keef’s volume-pricing arrangements that are in place. The parties will work together to jointly determine the appropriate product launch mix and timing for each individual U.S. market, based on existing offerings and market dynamics, including the territory of Puerto Rico.
Mexico
If Keef expands into Mexico, the parties have agreed that the same terms that apply to the United States and Puerto Rico would apply to the Mexican market.
European Export Market
Within twelve months, BevCanna intends to begin export of its products to the European market, either directly or via licensing agreements. Under the Agreement, BevCanna and Keef have agreed to negotiate in good faith expansion of the terms of their relationship to include Keef’s participation with BevCanna in its export program, on terms to be mutually determined.
Powder Technology
Under the Agreement, BevCanna agreed to provide Keef with a right of first refusal to make this technology available to Keef for evaluation and negotiate terms for the non-exclusive right to license such technology in the United States.
Investment in Keef Brands
Under the Agreement, BevCanna has agreed to invest US$150,000 in Keef Brands by participating in a convertible debenture offering (the”Offering”), in multiple tranches, as follows: US$25,000 by April 30, 2020, US$25,000 by May 15, 2020, $50,000 by May 31, 2020, and $50,000 by June 30, 2020. The subscription is subject to mutual agreement with respect to the terms of the Offering.