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SIGN BINDING LETTER OF INTENT TO DEVELOP CANNABIS AND HEMP DERIVED ALCOHOLIC AND NON-ALCOHOLIC BEVERAGES

 

LGC Capital Ltd. (LG.V) Creso Pharma Ltd. (Australia and Switzerland) and Baltic Beer Company Ltd. (United Kingdom), the home of the multiaward-winning Viru Beer, have signed a binding letter of intent to develop and market a bespoke portfolio of cannabis- and hemp-derived alcoholic and non-alcoholic beverages containing various ingredients, seeds, extracts and terpenes from hemp and cannabis plants.

The new joint venture company will include the following board members: Dr. Miri Halperin Wernli of Creso Pharma, John McMullen of LGC, and Alex Klaos of Baltic Beer Company Ltd, whose role will be to oversee the day-to-day operations of the new entity to ensure product development, growth targets and distribution reach are achieved.

Research and development work has already started in Switzerland, Estonia and the United Kingdom on a premium craft beer range containing unique terpenes mixes mimicking the terpenes of the cannabis plant. Terpenes are essential oils (organic compounds) found in plants that carry flavour and aroma.

The terpenes in the beer will carry the characteristic odour and fragrance of cannabis with the same taste and feel but will not contain THC or CBD or any other cannabinoids. The terpene mixes used to formulate the beers will have the smell and aroma of cannabis but in reality they originate from other plants mimicking the special mixtures. This is a significant advantage as it avoids the issue of regulatory restrictions.

Terpenes are safe molecules and are recognized as GRAS ("GRAS" = Generally Recognized as Safe) as attested by the U.S. Food and Drug Administration (FDA) classifying them as Food Additives, and by the Food and Extract Manufacturers Association and other world regulatory bodies classifying them as Safe (see WHO1/ FEMA GRAS2).

It is expected the first test batches of the terpene beer will reach selected markets in April/May 2018, with commercial sales expected to be ready for shipments from June/July 2018.

"This new joint venture combines Creso Pharma's cannabis and hemp expertise with the prestigious and multiple award-winning beer creators, Baltic Beer Company, to develop and provide consumers with innovative, high-quality hemp- and cannabis-derived beverages. Through the vast geographic reach of the three parties which spans a number of continents, future commercial and distribution partners have already been identified and are eagerly anticipating this innovative new range of drinks," said Creso Pharma's CEO and Co-Founder, Dr. Halperin Wernli.

The joint venture partners have already identified potential distribution partners in Europe, far East Asia, Central and Latin America, Canada, Africa and with the recent legalization of hemp seed-based food and drink products in Australia and New Zealand, partners have been identified in this region as well.

Further research and development will identify other opportunities within the legal framework of the target markets, which focus on a range of premium beers containing cannabis- and hemp-derived components. The joint venture partners plan to expand their portfolio into other alcoholic and non-alcoholic beverages with further announcements to be made in due course.

The joint venture will market and sell its products only in full compliance with local market regulations and only after securing all appropriate regulatory approvals. LGC's participation in the joint venture is conditional upon it obtaining all requisite regulatory approvals, including that of the TSX Venture Exchange.

"The cannabis infused beverage industry is an emerging and growing industry and we see a lot of potential value in this market. We also note Constellation Brands' (NYSE:STZ) recent minority stake in Canada-based Canopy Growth Corporation which clearly signals real interest in this sector from much larger, established and more traditional business," said John McMullen, CEO of LGC.

Alex Klaos, Director of Baltic Beer Company Ltd stated, "This partnership brings together parties who have the expertise and proven history to develop unique cannabis and hemp plant derived product offerings for consumers. We are all very excited about working with Creso Pharma and LGC on this project. The partners bring scientific expertise, significant financial investment and a wealth of experience in the beer industry which we believe will be a resounding success."

David Lenigas, LGC founder and Co-Chairman commented, "This is an excellent first venture with Creso Pharma. The international hemp and cannabis-infused beverage market is growing at significant rates and we are committed to becoming an active player in this exciting new market. Viru is already exporting their award-winning beer to many countries around the world, and with Creso Pharma's scientific expertise, we look forward to working actively to create something of real value."

About LGC:

LGC Capital Ltd. is a Canadian incorporated public company listed on the TSX Venture Exchange (TSXV: LG). LGC is a diversified investment company with core holdings in businesses that provide shareholders with exposure to a diverse range of high-growth businesses, products and services. To date, LGC has entered into agreements for investments in private cannabis operations in South Africa, Australia and Canada. LGC also has a joint venture with AfriAg (Pty) Ltd. to grow and distribute medical and recreational cannabis products in the southern African region for export to regulated and certified end users around the world, and a strategic alliance with Creso Pharma Limited for the creation of a vertically-integrated cannabis operation, which includes cultivation, IP generation, product development, and commercialization. LGC is headquartered in Montreal, Canada.