The Hydroponics Company Ltd (ASX:THC) has entered into a binding term sheet allowing it to enter three agreements subject to a 60 day due diligence window.
These agreements are for exclusive rights to lease organic certified land in northern New South Wales, an off-take agreement, and a supply agreement.
Lease agreement to grow medicinal cannabis
The lease agreement is with Jenbrook Pty Ltd for the use of Jenbrook’s organic certified land in northern New South Wales.
THC proposes to use the property for growing medicinal cannabis subject to necessary statutory and regulatory approvals.
It is a rare USDA certified organic site incorporating a spring water resource.
Off-take agreement for medicinal cannabis
Under the medicinal cannabis off-take agreement with Meluka Health Pty Ltd, THC will provide exclusive access to its medicinal cannabis for use by Meluka Health for its Meluka Honey production.
Meluka Health is a wellness and nutrition company that develops and sells naturally derived, organic and ecologically pure products.
It is 50% owned by EVE Investments Ltd (ASX:EVE).
Meluka to supply tea tree extract to THC
Finally, the binding term sheet proposes an agreement whereby Meluka will supply its tea tree extract product to THC for use in the development of new medicinal cannabis products.
READ: The Hydroponics Company acquires world-class biomanufacturing facility, shares up
THC’s chairman Steven Xu said: “The execution of the term sheet by THC has the potential to give THC another low-cost growing facility offering high quality organic medicinal cannabis crops as well as potential synergies with the Meluka Health team to deliver new products to the market made with THC’s cannabis.
“With the acquisition of THC’s biomanufacturing facility last week, THC is now in a prime position for both expansion of its research program and to enter into production.”