Westleaf Inc. announced on Wednesday that its subsidiary, Westleaf Labs LP, has entered into a white-labelling agreement with Delta 9 to supply approximately $4 million of cannabis derivative products from its large-scale extraction and manufacturing facility in Calgary.
Calgary-based Westleaf said the contract will begin on Oct. 1, subject to receipt of final licence approval from Health Canada, and will carry an initial term of one year, where Delta 9 will be required to purchase a minimum of about $4 million of various white labelled derivative products – expected to include a mix of vape pens, gel caps, tincture oil, and edibles – with an option to increase that up to $16 million per year.
“This is an important milestone for The Plant (Westleaf’s manufacturing facility) and for Westleaf in securing contractual revenue,” said Scott Hurd, president and CEO, Westleaf Inc., in a news release.
“This is the first of what we believe will be many derivative product sales and manufacturing agreements for our facility, Phase I of which is designed to process up to 65,000 kilograms of dried cannabis flower per year.”
Hurd said the facility has an additional 45,000 square feet of space available for expansion, which has the potential to increase its processing capacity to more than one million kilograms per year. Additionally, the expansion will greatly increase its capacity to formulate and produce the next wave of cannabis derivative products such as vapes, edibles and topicals, once they are legalized later this year, he said.
“When looking at our suite of options for white-labeled derivative cannabis products, Westleaf stood out as the clear choice,” said John Arbuthnot, president and CEO of Delta 9. “Given Westleaf’s large menu of existing product formulations and distribution capabilities through their cannabis retail chain, Prairie Records, we view this agreement as a positive step in expanding our Delta 9 branded product offerings and distribution footprint.”
Westleaf said the Delta 9 branded white-label products are anticipated to be sold through Westleaf’s chain of cannabis retail stores, Prairie Records, in addition to Delta 9’s retail in Manitoba and provincial cannabis regulatory bodies across Canada.
Mario Toneguzzi is a Troy Media business reporter based in Calgary.