26 January 2022

Cannabis chain of custody solutions provider takes captives stake

Medical cannabis compliance and data solutions provider Global Cannabis Applications Corp (GCAC) is to buy a 33% stake in a South African cell captive from Blue Anchor Risk Solutions (BAR).

According to a letter of intent, the deal will also see GCAC grant Johannesburg-based consultant BAR exclusive sub-license rights for its Efixii blockchain software in South Africa, Lesotho and Zimbabwe. BAR will pay GCAC royalties fees based on usage of the software.

GCAC will purchase the third stake in the captive by granting 4 million new common shares of GCAC shares to BAR at a price of $0.05. The shares will be used by the captive as collateral for its insurance book and may only be sold if the collateral holder registers a valid claim.

BAR will also grant an option to GCAC to purchase 4 million common shares back at $0.001 per share, exercisable by the company either when the collateral is replaced by the cash flow of the cell captive or on the second anniversary of the transaction, whichever is sooner. GCAC will maintain its 33% interest in the captive.

The cell captive covers medicinal cannabis cultivators and growers and is currently the only industry-specific solution in South Africa. The country has approximately 45 approved commercial cannabis licenses, with a further 150 applications in process. Lesotho has about 15 growers now coming online, while in Zimbabwe, there are 47 licenses issued or in the process of being issued.

“As the first cell captive insurance offered exclusively to the cannabis sector, we require governance and quality assurance by our cultivators, which Efixii provides as a software system,” said Blue Anchor Risk founder Ildiko Richardson.

“With over 400 licenses issued on the African continent, we believe an insurance company and provider of the state-of-the-art track, trace, and efficacy solution will provide the insight required for better quality and global compliance and governance for offering premium African grown product globally.”