Toronto, Ontario–(Newsfile Corp. – April 21, 2020) –  Osoyoos Cannabis Inc. (CSE: OSO) (“Osoyoos” or the “Company”) announced today that the Company has entered into an equipment lease (the “Equipment Lease“) and a joint-venture agreement (the “JV Agreement“) with 2623942 Ontario Limited (the “Licensed Producer“). Furthermore, the Company is also pleased to provide a corporate update regarding its next annual and special meeting of shareholders and results of management’s operational cost-cutting measures.

Equipment Lease & JV Agreement

The Licensed Producer is a private, vertically-integrated health and wellness company based in Barrie, Ontario. The company’s facility includes in excess of 3,000 acres of outdoor hemp-based farmland and a licensed production facility under the Cannabis Act (Canada). The Licensed Producer is focused on utilizing its proprietary strains of industrial hemp to develop a wide range of innovative CBD-based products and will also offer contract tolling extraction services to other third-party businesses.

Pursuant to the Equipment Lease, Osoyoos has agreed to lease one of its Vitalis Q-180 Series extraction systems to the Licensed Producer to process their proprietary-grown biomass for a term of four years. Osoyoos will receive up to $100,000 in cash upfront over the first 60 days of the lease and will receive monthly lease payments of approximately $17,750 (plus applicable taxes) for the remainder of the term. Provided that all payments have been made under the Equipment Lease, the Licensed Producer may at its option buyout the equipment at the end of the term for $1.

Osoyoos and the Licensed Producer have also entered into a five-year JV Agreement to offer third-party contract tolling extraction and processing services, effective April 17, 2020. Under the JV Agreement, Osoyoos has agreed to provide use of its other Vitalis Q-180 Series extraction system to the Joint-Venture in exchange for 50% of the net profits derived from such tolling services, which is defined as revenues minus direct costs, which are to be mutually agreed to on a quarterly basis. The parties have also agreed to form a management committee to oversee the joint-venture’s business plan, accounting, day-to-day operations and terms of processing contracts. Furthermore, Osoyoos is guaranteed a monthly minimum rental payment and total minimum cumulatuve payments of $1.5 million under the JV Agreement.