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Sativa Investments plc

Sativa Investments PLC signed Heads of Terms for an option to lease a 7.53 acre UK site for medicinal cannabis production

Geremy Thomas, founder and Chief Executive Officer of Sativa Investments, said: “Sativa is the first UK medicinal cannabis vehicle and continues its first-mover advantage with this major step towards being the UK’s first seed to consumer business.

“The Company already has a cannabis-testing laboratory and a CBD wholesale and retail business in George Botanicals.”

Sativa Investments PLC (NEX: SATI), the UK’s first medicinal cannabis investment vehicle, has signed Heads of Terms for an £85K option to lease a 7.53 acre development site in Wiltshire.

The Board expects the option agreement to be signed later today, Thursday, 18 October 2018. On exercise of the option agreement, the Company intends to construct a glasshouse of up to 6.86 acres (298,806 sq ft) on the site, as its moves to becoming a seed to consumer medicinal cannabis business with a UK focus. The site will be used to grow cannabis plants for the production of medicinal cannabis and cannabidiol (“CBD”) products, which by law must contain a maximum of 0.2 per cent tetrahydrocannabinol (“THC”). The site will also host an extraction facility and offices.

The Directors believe that the glasshouse’s location would be unique, in so far as it would sit beside an existing 3.6MW capacity bio-digester plant from which it will be entitled to take the plant’s surplus heat, purchasing electricity at significantly below market rates, making it the first green-powered medicinal cannabis canopy in the UK. The Directors believe that this in turn will enable Sativa to offer products to the market at highly competitive rates. The Company intends to be a leader in the quality of UK grown product.

Sativa subsidiary George Botanicals already has a UK Home Office hemp growers’ licence, involving a low THC crop, and has applied to the UK Home Office Drugs Licensing and Compliance Unit for a medicinal cannabis growing licence. The glasshouse already has planning permission for its build and the site will comply with all Home Office conditions for the Permitted Use of the product including state of the art security.

On exercise, Sativa will enter into a 25-year term lease and begin development of the site. Once entered into, the option may be exercised at any time up to 1 July 2019 and can be extended for a further three months subject to payment of a further £15K.

Global industry standards suggest that each square foot of canopy produces 40 grams of raw cannabis plant which, in the last 12 months, has had an average wholesale gross revenue of £4.00 per gram. The Directors intend that 65 per cent of the glasshouse, an estimated 194,224 sq ft of the total 298,806 sq ft, will be harvested, with the remaining third being used for ancillary space such as walkways and seedlings. The build-out costs for a high-tech facility are estimated to be £35 per sq ft.

The build spend for the 7.53 acre site, including the 298,806 sq ft glasshouse plus an extraction facility and offices, is estimated to be £10.5 million, for which the Company intends to raise funds via an equity Placing or Offer, or its own cash resources at the appropriate time.

Sativa will be advised on cannabis strain selection by Veritas Pharma Inc. (“Veritas”), the Canadian-based emerging pharmaceutical company, through Veritas’ subsidiary company Cannevert Therapeutics Ltd. Sativa invested £117K in Veritas in May 2018.

As part of the consideration for the option, Sativa will also offer the proprietors of the farm on which the glasshouse will be built, an option to acquire 2 million ordinary shares in the Company at a price of 5 pence per share, once the development is completed and operational.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.