Gaia Grow Corp. (the “Company” or “Gaia”) (CSE:GAIA) (CNSX:GAIA.CN) (Frankfurt:GG0) is excited to announce that its wholly-owned subsidiary, TruExtracts Laboratories (“TRU”), has signed a 12-month white labeling agreement with an arms-length Canadian cannabis producer (“the producer”) to manufacture approximately 30,000 Cannabis pre-rolls per day. Production is expected to commence at TRU’s Canadian licenced Cannabis extraction facility in January of 2022. This agreement has the option to extend in 1-year increments beyond this term.

 TRU will be responsible for purchasing and processing the biomass in accordance with the processing service orders provided by the producer and will deliver final retail products in accordance with shipment instructions coordinated and supplied by the producer. The entire production run will be purchased by the producer for the 12-month period.

The agreement is expected to generate revenue of up to $8,369,000 during the initial 12-month term.  The assumed revenue is based on production of 30,000 pre rolls per day that will be packaged into 10 packs for retail sale. For a total of 3,000 10 packs per day with TRU wholesale revenue between approximately $8 for unlabeled 10 packs to approximately $15 for labeled and branded 10 packs.  Actual revenue will vary depending on final production.  Cost of production by TRU is dependent on the commoditized price of dried flower and labour in the facility.  

The producer will coordinate the logistics of the delivery of retail products and ensure that the retail products are in accordance with the Cannabis Act and all regulations made thereunder, all Health Canada requirements, any requirements particular to the provincial or local government, and the producer’s client’s reasonable standards.

“This is a great step forward for TruExtracts and Gaia” said Frederick Pels, CEO of Gaia Grow.

“The pre-roll market share is one of the largest segments in Canada's legalized cannabis marketplace. It represents north of 20% of all products sold in British Columbia and the Prairie provinces with the rest of Canada in the high teens. It's great to see TruExtracts providing products for this significant market with a healthy double-digit profit margin. I look forward to updating shareholders as Tru continues to expand and deliver significant value to our shareholders.”

“Pre-roll production represents approximately 60% of Tru’s current product production space”, said Andre Sinclair, COO of TRU.

“This agreement demonstrates the effectiveness of Tru’s business model. As other SKUs launch and Tru expands our building space, we expect this segment to conservatively double over the course of 2022 and to see significant revenue growth ahead for Tru as well as Gaia.”