Supreme Pharmaceuticals Inc. (OTC: SPRWF), an aspiring producer of medical cannabis under Canada’s Marihuana for Medical Purposes Regulations (“MMPR”), recently announced that it closed an arms-length acquisition of a South Ontario-based company that holds a pre-build MMPR license. With the license, the target firm is approved to produce up to 24,000 kilograms of cannabis per year.

Health Canada expects the market for medical cannabis to reach $1.3 billion by 2024 with the number of patients increasing from 40,000 to 400,000 over the next ten years. The majority of current patients obtained their authorizations under the previous MMAR regulations, while nearly 1-in-10 Canadian doctors have already written recommendations for medical cannabis in the past.

“This first acquisition by Supreme is a very real step in becoming a medical marijuana producer in Canada,” stated Supreme’s management team in a recent press release. “This project has both the scale and the timing to make the company one of the leaders in this new field. While we continue to look at additional acquisitions, our immediate focus is to get this facility into production.”

Before it can begin producing cannabis, the target company must complete the installation of the required security measures. Health Canada will then undergo a final inspection of the 324,000 square foot facility and, if it finds no issues, issue a MMPR license. Management anticipates that production could begin by the fourth quarter of 2014 with 90 days required to implement the security measures.

Supreme will issue 93,211,063 shares at $0.07 per share to make the acquisition, with half of the shares issued upon closing and half issued upon achievement of a full MMPR license. The shares will be released over a three-year period in 15% tranches every six months with the first release being on December 1, 2014.

Shares of Supreme Pharmaceuticals Inc. were trading up more than 30% early during Tuesday’s session.

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