Enter the Largest Cannabis Market in Western Cultures - European Union ("EU")
AsiaBaseMetals Inc. (the "Company") (TSX-V: "ABZ") has entered into a cooperation agreement (the "Cooperation Agreement"), subject to the Company's confidentiality obligations, with a city (the "City") within Croatia, a member country (the "Country" and/or "Croatia") of the European Union ("EU") under conditions set forth by the law of the Country, to obtain relevant licences for growing and selling cannabis for medical purposes ("Medical-Cannabis-Permit"), as well as to obtain a licence for growing, processing and sale of cannabis for commercial purposes including recreational purposes ("Recreational-Cannabis-Permit") when and if this becomes permitted by law in the Country. The Country of Croatia has legalized Cannabis for limited medical use (2015) and decriminalized it for personal use (2013).
The Agreement provides that the City, as a unit of local self-government, will provide support to AsiaBaseMetals Inc. by submitting the licence application for the Medical-Cannabis Permit through a limited company to be initially held 100% by the City ("City-New-Sub-Co-Ltd."). Once City-New-Sub-Co-Ltd. obtains a Medical-Cannabis-Permit the City will transfer shares of City-New-Sub-Co-Ltd. to AsiaBaseMetals Inc., whereby AsiaBaseMetals Inc. shall become 100% owner or majority owner of City-New-Sub-Co-Ltd., allowing the City to retain a minority interest (news release - June 19, 2019 & news release June 26, 2019). The Company intends to incorporate a wholly-owned subsidiary to acquire City-New-Sub-Co-Ltd. to facilitate a potential spin-out transaction on a planned one (1) new spin-out company share for each existing Company share basis, to create a new company focused on the cannabis sector as further outlined below under the heading "About AsiaBaseMetals Inc". The transaction contemplated by the Agreement and any spin-out transaction is subject to the approval of the TSX Venture Exchange.
"It is interesting to note that in the cannabis sector, the largest market within western cultures is represented by Europe, having an approximate population of 740 million people (with EU representing approximately 512 million), when compared to North America having an approximate population of 589 million (with USA representing approximately 327 million). The Country has already passed legislation for growing and selling cannabis for medical consumption (2015) and is awaiting the required regulations for full implementation. The Country, especially within the City region, has one of the best climates and agricultural conditions within the EU. The region has advanced experience in both outdoor and greenhouse cultivation of products including tomatoes, carrots, asparagus, other vegetables and vegetation. Further, City is a coastal city that has access to freeways/highways, international airports, ports, marinas, power, and all other essential required infrastructure to service agriculture, industry and tourism. The Country hosted approximately 20 million tourist/business visitors in 2018, who came to the Country to enjoy its rich history, culture, people, cuisines & wines, extensive coastline (mainland having over 1,700 km of coastline and islands having over 4,000 km of coastline), beaches, leisure activities and recreation. If fully implemented, this opportunity is expected to provide AsiaBaseMetals Inc. a true first mover advantage in the EU. The Company is continuing to consider additional opportunities and acquisitions in the cannabis sector only in fully legal jurisdictions." stated Raj Chowdhry, CEO.
"Further, pursuant to the Company's cooperation agreement with the City in Croatia, the City having received clearance from the national government to incorporate City-New-Sub-Co-Ltd for applications of Medical-Cannabis-Permit, the City anticipates that City-New-Sub-Co-Ltd will be incorporated and be able to start business soon, likely around end of March, 2020. The City having commenced the construction of a 3,000 square foot (Sq-Ft) laboratory (the "Lab") within a new 25,000 Sq-Ft building (the "Building") in anticipation of the completion of incorporation of City-New-Sub-Co-Ltd anticipates the Lab (now 80% completed) and the Building (now 90% completed) to receive occupancy permit by April 30, 2020 (news release - February 20, 2020)." stated Raj Chowdhry.
"This timing of this progress comes at a very opportune time for the Company, since the EU is addressing issues in this sector, especially as they pertain to "Novel Foods' as defined by the EU. Pursuant to the EU's Novelty Foods policy, virtually all CBD products sold within the EU, in my judgement, do not comply with the laws, generally speaking: as they require new levels of permitting. This shift in EU's views and its upcoming actions effectively truely provides our Company a first mover advantage; especially with Croatia finally implementing its 2015 decision to facilitate its validly existing laws by finally drafting/fianizing the regulations in the Cannabis sector; especially with a bill being introduced to possibly legalize recreational use in the Country. You can well imagine, the opportunities in the Cannabis sector in the EU. Europe being the largest up and coming western-culture cannabis market in the world (population of 740 million people, with EU representing approximately 512 million)," stated Raj Chowdhry.
The Cannabis Sector
The Agreement is a result of the Company's recent review of the cannabis sector and markets and subsequent efforts to identify, pursue and implement opportunities in Europe which is the largest up and coming cannabis market in the world. The Company intends to retain business and commodity focus for this sector by plan of arrangement spin-out transaction(s), subject to regulatory approvals including the approval of the TSX Venture Exchange.