|VICTORIA, British Columbia, January 10, 2019 – Emerald Health Therapeutics, Inc. (TSXV:EMH; OTCQX:EMHTF) announced that, further to its news releases dated April 17,2018 and November 19, 2018, it has closed its 51:49 joint venture (the “Joint Venture”) with San Diego-based Emerald Health Bioceuticals (“EHB”), called Emerald Health Naturals (“EHN”).
Emerald has invested $5,000,000 for 51% equity ownership of EHN. EHB has granted EHN the exclusive Canadian distribution rights to EHB’s award-winning product line in exchange for 49% equity ownership of EHN. EHB’s product line consists of nutritional supplements that use non-cannabis, non-psychoactive plant-based bioactive compounds to support the body’s endocannabinoid system.
Market research commissioned by the Company identified that approximately 60% of legal cannabis users also use natural health products. This strong consumer overlap between the two markets is expected to create a unique opportunity for Emerald to build its health brand through EHN and begin sales of endocannabinoid-supporting products in natural health product channels. These channels are not authorized to sell cannabis under the Canadian federal cannabis regulations for recreational use which came into force on October 17, 2018. However, if these channels are approved in the future, the Company expects to be well positioned to introduce its cannabis-based products into these channels.
The formation of the Joint Venture is a “related-party transaction” as such term is defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”) as EHB is approximately 71% owned by Emerald Health Sciences Inc., which is also the holder of approximately 30.6% of the outstanding common shares of the Company. The Company is relying on the exemption from the formal valuation requirements of MI 61-101 set out in Section 5.5(b) of MI 61-101 and the exemption from the minority shareholder approval requirements of MI 61-101 set out in Section 5.7(a) of MI 61-101 in respect to the creation of the Joint Venture.
In connection with the formation of the Joint Venture, EHN has also acquired the assets of GAB Innovations (“GAB”) and has granted non-exclusive sub-distribution rights to Avricore Pharmaceuticals Inc. (formerly VANC Pharmaceuticals Inc.) (“Avricore”). Both GAB and Avricore have established networks and a history of sales success in the natural health product and pharmacy channels. Gaetano Morello, ND, the founder of GAB, has been appointed CEO of EHN.
Emerald also announces that Chris Wagner has resigned as a director of the Company. As previously announced, Mr. Wagner stepped down as CEO effective November 28, 2018. Mr. Wagner will continue to act as a consultant to Emerald and provide assistance when needed.