Vancouver, BC — (May 9, 2018) — GLOBAL HEMP GROUP INC. (“GHG” or the “Company”) (CSE: GHG / OTC: GBHPF / FRANKFURT: GHG) is pleased to announce that is has signed a Joint Venture Agreement (the “Agreement”) with MARIJUANA COMPANY OF AMERICA, INC. (OTC: MCOA) to cultivate high yielding CBD hemp at its recently acquired 109 acre farm (see news release of May 1, 2018) in Scio, Oregon (the “Project”).
Pursuant to the terms of the Agreement, GHG and MCOA (the “Partners”) will jointly invest a total of US$1.2 million in the development of the Project in 2018. Funding for the Project will be done on a 50/50 basis. GHG has sufficient capital on hand to fund their share of the Joint Venture for 2018, as a result of the recently completed private placement (see GHG’s news release of March 7, 2018 for further details)and MCOA is in the process of advancing their share of the investment.
The Partners have engaged TTO Enterprises Inc. (“TTO”) to manage the Project. TTO will serve as Project and Farm Manager and will be responsible for the entire Scio operation as well as provide consulting services to the Partners’ 125-acre joint venture farm operations in New Brunswick, Canada. TTO’s expertise includes genetics development, selection and management, planting and harvest scheduling, clone management, field preparation, field set and field management strategies. For managing the Project, TTO will earn a 15% equity interest in the Project. The Partners have the right to exchange 10% of TTO’s equity initial interest of 15% for common shares and share purchase warrants of both of the Partners, based on specific milestones being met, as more fully described below.
The joint venture entity, Covered Bridge Acres LTD. (“CBA”), is initially owned by GHG (42.5%), MCOA (42.5%) and TTO (15%). Upon planting of 20,000 clones at the farm (the “First Milestone”), one third (5.0%) of TTO’s initial interest in CBA will be acquired by GHG and MCOA in exchange for 250,000 common shares of GHG and 250,000 common share purchase warrants of GHG exercisable at a price of USD$0.12 for a period of five years to be issued to TTO, along with 1,000,000 common shares of MCOA and 1,000,000 common share purchase warrants of MCOA exercisable at a price of USD$0.03 for a period of five years to be issued to TTO. Upon reaching the First Milestone, TTO’s ownership in CBA will then be reduced to 10%.
Upon CBA’s EBITDA reaching US$1,000,000 in a calendar year (the “Second Milestone”), an additional one third (5%) of TTO’s initial interest in CBA will be acquired by GHG and MCOA in exchange for 250,000 common shares of GHG and 250,000 common share purchase warrants of GHG exercisable at USD$0.12 for a period of five years to be issued to TTO, along with 1,000,000 common shares of MCOA and 1,000,000 common share purchase warrants exercisable at USD$0.03 for a period of five years to be issued to TTO. Following reaching of the Second Milestone, TTO’s ownership in CBA will be reduced to 5.0%.
Pursuant to the terms of the Agreement, common shares and common share purchase warrants of both GHG and MCOA have been deposited in escrow at a price per share of USD$0.12 for GHG and USD$0.03 MCOA for this purpose.
In addition, the Partners have set up a second escrow of common shares and share purchase warrants to incentivize TTO for the successful development and maximization of shareholder value in the Project (the “Second Escrow”).
Pursuant to the terms of the Agreement, the Partners have deposited to escrow as follows: GHG has deposited 2,500,000 common shares of GHG at a deemed price of CDN$0.20 and 2,500,000 common share purchase warrants exercisable at a deemed price of CDN$0.36 per common share for a period of three years, whereas MCOA has deposited 11,000,000 of its common shares at a deemed price of USD$0.046 per common share and 11,000,000 common share purchase warrants exercisable at a price of USD$0.083 per common share for a period of three years.
Fifty percent (50%) of this Second Escrow will be earned by TTO upon CBA generating US$1,000,000 EBITDA, and the final fifty percent (50%) will be earned by TTO upon CBA generating US$2,000,000 EBITDA.
GHG and MCOA continue to develop a robust North American joint venture relationship. The Partners initially joint ventured on hemp trials in New Brunswick in 2017, which has now expanded to 125 acres of commercial production for 2018. This partnership has now expanded into the United States with the addition of the Scio, Oregon Project. The Companies continue to seek additional cannabinoid production opportunities across Canada and United States.
About Global Hemp Group Inc.
Global Hemp Group Inc. (CSE: GHG) (OTC: GBHPF) (FRANKFURT: GHG), is headquartered in Vancouver, British Columbia, Canada, with base operations in Montreal and Los Angeles. The Company is focused on a multi-phased strategy to build a strong presence in the industrial hemp industry in both Canada and the United States. The first phase of this strategy is to develop hemp cultivation with the objective of extracting cannabinoids (CBD, CBG, CBN & CBC) and creating a near term revenue stream that will allow the Company to expand and develop successive phases of the strategy. The second phase of the plan will focus on the development of value-added industrial hemp products utilizing the processing of the whole hemp plant, as envisioned in the Company’s Hemp Agro-Industrial Zone (HAIZ) strategy.
About Marijuana Company of America, Inc.
MCOA is a corporation which participates in: (1) product research and development of legal hemp-based consumer products under the brand name “hempSMART™”, that targets general health and well-being; (2) an affiliate marketing program to promote and sell its legal hemp-based consumer products containing CBD; (3) leasing of real property to separate business entities engaged in the growth and sale of cannabis in those states and jurisdictions where cannabis has been legalized and properly regulated for medicinal and recreations use; and, (4) the expansion of its business into ancillary areas of the legalized cannabis and hemp industry, as the legalized markets and opportunities in this segment mature and develop.
Forward Looking Statements.Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Global Hemp Group Inc., including, but not limited to the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.
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